Xiaomi’s profit increases in the second quarter, boosted by sales of premium phones

SHENZHEN, China (Reuters) – Xiaomi Corp 1810.HK overseas sales have returned to pre-pandemic levels, its acting chief financial officer said on Wednesday, as it announced that its profits had more than doubled in the second quarter on strong growth in its smartphone business top of the line.

Revenue rose 3.1% in the quarter ending June 30, while sales reached 53.54 billion yuan ($7.77 billion), beating analysts’ expectations. Revenue rose from 51.95 billion yuan in the same period a year earlier.

Overall revenue from the company’s smartphone business, which accounts for nearly two-thirds of its revenue, fell 1.2% to 31.6 billion yuan. Xiaomi sold 28.3 million handsets in the quarter, up from 32.1 million units a year earlier.

However, sales of high-end phones in overseas markets increased 99.2% year-on-year, with average selling prices rising 11.8% during this period.

“It shows that our smartphones achieved a major breakthrough in the second quarter,” Wang Xiang, Xiaomi’s acting chief financial officer, said on the earnings call.

The company’s high-end phone saw “explosive growth” in Europe, where smartphone shipments rose 64.9%, Wang said.

Profit rose 129.8% to 4.49 billion yuan.

Xiaomi posted an adjusted net profit of 3.37 billion yuan, beating the average market estimate of 2.24 billion yuan, according to Refinitiv data.

Xiaomi has increasingly relied on overseas markets like India to drive its growth as it battles competition from China’s market leader Huawei.

The company’s revenue in overseas markets increased 10% year-on-year in the second quarter, accounting for 44.9% of its total revenue.

As sales in India began to recover as its lockdown was gradually lifted during the second quarter, production constraints weighed on sales, Wang said. The number of new smartphone activations in July was still 72% of pre-pandemic levels, he said.

Xiaomi has also found itself caught in a backlash against Chinese tech companies in India, where the government last month banned several mobile apps from a range of Chinese firms, including two from Xiaomi.

Wang said Xiaomi remains confident in the Indian market, saying the company will continue to “promote mutual understanding and trust between people in India and China.”

($1 = 6.8896 Chinese yuan renminbi)