Xiaomi revenue falls short of estimates as competition intensifies

The Xiaomi logo can be seen in a Xiaomi store in Shanghai, China on May 12, 2021. REUTERS / Aly Song GLOBAL BUSINESS WEEK AHEAD

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SHANGHAI, Nov. 23 (Reuters) – Chinese smartphone maker Xiaomi Corp (1810.HK) on Tuesday announced a smaller-than-expected 8.2% increase in third-quarter revenue, hurt by intensifying competition from domestic competitors Oppo and Vivo.

Sales reached 78.06 billion yuan ($ 12.22 billion) in the three months to September 30. Analysts had expected 79.20 billion yuan, according to data from Refinitiv.

Profit fell 84% to 788.6 million yuan, which Xiaomi attributed to changes in the valuation of companies in its investment portfolio.

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Excluding one-off gains and losses, Xiaomi made a profit of 5.18 billion yuan, largely in line with analysts’ average expectations of 5.09 billion yuan.

Xiaomi’s smartphone revenue only increased 0.4% to 47.8 billion yuan.

Global smartphone sales in China fell 5% between July and September, according to research firm Canalys.

Xiaomi has managed to gain market share this year due to the withdrawal of its main rival Huawei Technologies Co Ltd (HWT.UL), which saw its smartphone business tank following US sanctions.

But the company has not kept pace with its top-selling competitors Oppo and Vivo, while Honor – a Huawei spinoff brand – overtook Xiaomi in the third quarter to become China’s third-largest smartphone maker in terms of share of Marlet.

Xiaomi’s shipments to China grew only 4% year-on-year in the third quarter, Canalys said.

Faced with fierce competition in a shrinking market, the company responded by launching an aggressive push into brick-and-mortar retail, an industry in which it has long fallen behind.

At the end of October, Xiaomi announced that it had opened its 10,000th store in China and pledged to triple that number over the next two to three years. Read more

($ 1 = 6.3878 Chinese yuan)

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Reporting by Josh Horwitz; Editing by Louise Heavens, David Goodman and Ana Nicolaci da Costa

Our standards: Thomson Reuters Trust Principles.

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