Xiaomi makes a comeback with profit of 13.5 billion yuan in 2018, plans to expand internationally
There were very few firms anywhere in the world that maintained a high level of growth last year, and Chinese Xiaomi was one of them.
Xiaomi Corp, the Beijing-based giant, reported 2018 net profits in the amount of 13.5 billion yuan (equivalent of $2 million), which is an impressive rebound from 2017, when the company lost 43.9 billion yuan.
The firm’s revenue increased by an amazing 52.6%, amounting to 174.9 billion yuan,and almost reaching the 176 billion yuan market average projected by Bloomberg.
What was the driver of this growth? The almost 42% growth in international smartphone sales, amounting to 113.8 billion yuan in 2018, and the total shipments increased o 118.7 million units, which is a 29.8% surge.
Xiaomi rightfully claimed that the company was one of the only companies that showed healthy growth in 2018.
The company reported that is revenue for smartphone sales conducted in mainland China grew persistently in 2018 as the ASP (average selling price) was up 17%.
As Xiaomi shipped increasingly greater numbers of units to developed markets, their average selling price also increased 9% year-on-year.
The company posted a 3.4 billion yuan growth in Q4 2018, which is an excellent rebound from the Q4 2017, when it showed a 12.1 billion yuan loss. The revenue for this time period went up 26.5% to 44.4 billion yuan.
The growth of Xiaomi smartphone sales in China had gone down significantly by over 34% in Q4 2018, the fast growth in Europe in India had offset the losses.
Xiaomi currently ranks fourth in the European market, according to Canalys analytics firm. It has also taken the first spot from Samsung in India in 2018, taking it over with its accessible segment Redmi lineup.
The company plans to repeat its accomplishments in the Indian market in other areas, such as certain Western European countries and Indonesia.
The company’s CEO Shou Zi Chew stated that Xiaomi is making increasingly more investments, with nine of the companies invested in by the company going public in 2018.
Xiaomi is number 4 smartphone supplier in the world, and has huge plans for expanding in Africa. It has already taken root in Egypt, and is planning to expand into Nigeria, Morocco and Kenya, stated Wang Xiang, company’s senior VP for international expansion in a recent interview. He also said that there’s no timetable for Xiaomi’s expansion to the US market via local carriers. The US-China 2018 trade war made numerous Chinese companies reevaluate their plans for US expansion.
Lei Jun, company’s CEO, founder and chairman, said last March that the company was targeting US expansion by the end of 2018 or early 2019. Other products, such as projectors, are already sold in the US at Walmart and Amazon.com.
It still seems that the drop in China sales is a negative factor for Xiaomi. In fact, JP Morgan downgraded the company to neutral in January 2019, since the slowdown in mainland China was so significant.
The JP Morgan report claimed that Xiaomi may see a drop in shipments and marginal downside risk due to the limited prospects.
As it attempted to boost margins, Xiaomi had made its budget Redmi series into an independent brand, so that the umbrella Xiaomi brand can expand to the more expensive market segment.
Xiaomi’s shares traded in Hong Kong went down approximately 30% since last July, when it began trading at HK$17.
The stock was sold heavily in January, as Xiaomi’s lockup period ended in early 2019, allowing key investors to sell stock.Source