Titanium Media App reported on November 23 that Xiaomi Group disclosed its performance announcement for the third quarter of 2022. During the reporting period, the revenue of the third group of Xiaomi Group was 70.47 billion yuan, a year-on-year decrease of 9.7%, slightly higher than the market expectation of 70.16 billion yuan. The adjusted net profit was 2.12 billion yuan, a year-on-year decrease of 59.1%, higher than the market expectation of 1.99 billion yuan.
From the perspective of performance, Xiaomi is still in the overall downward trend of the industry and continues to struggle under pressure.
In the past third quarter, a total of 297 million smartphones were sold worldwide, a year-on-year decrease of 9%, and the Chinese market fell by 21%. This is the fifth consecutive quarter of year-on-year decline in smartphone sales, according to data agency Strategy Analytics. The agency predicts that global smartphone shipments in 2022 will also decline by 9% to 10% year-on-year. Among the top five brands in global mobile phone shipments, Apple is the only one to maintain positive growth.
In the Chinese market, according to Counterpoint data, in the third quarter of 2022, Xiaomi ranked fifth in the domestic market, its market share fell slightly from 14% in the same period last year to 13%, and its shipments fell by 18.6% year-on-year. Among the top five manufacturers, the shipments of vivo and OPPO, the top two, both fell by 24.1% year-on-year, while Honor and Apple bucked the trend and rose by 2.5% and 6.8%.
According to the third quarter report data, Xiaomi’s smartphone business revenue in the quarter was 42.5 billion yuan, down 11.1% year-on-year; global smartphone shipments were 40.2 million units, down 8.4% year-on-year.
At the same time, the ASP (Average Selling Price, average selling price) of Xiaomi smartphones in the third quarter decreased by 3.0% from 1090.5 yuan per unit in the third quarter of 2021 to 1058.2 yuan per unit; It fell to 8.9% from 12.8% in the quarter.
The decrease in average selling price and gross profit margin is highly related to Xiaomi’s inventory clearance strategy in the third quarter.
“Xiaomi Group has been using the big promotional season to clean up the entire channel inventory. The overall ‘water level’ of the inventory is in the process of declining. It is currently down 9% year-on-year and month-on-month. It is hoped that after the fourth quarter and January and February next year, Inventories are at healthy levels.”
Wang Xiang, president of Xiaomi Group, said on the earnings call that Xiaomi’s inventory in China has returned to a healthy level, and now it will use several important (promotional) festivals in the fourth quarter to deal with overseas inventory issues. “You’re going to see (inventory) come down as sales, and overall there’s no inventory that’s going to be a big problem.”
It can also be seen from the financial report that Xiaomi’s total inventory as of September 30, 2022 is 52.997 billion yuan, which is basically the same as the end of 2021. However, during the reporting period, Xiaomi’s inventory impairment provision was 2.286 billion yuan, which was much higher than the level in the same period in 2021. This means that Xiaomi’s inventory clearance pressure still exists after the third quarter.
It is worth noting that in the case of reduced revenue and profits, Xiaomi’s R&D expenditure in the third quarter has increased significantly.
The financial report shows that Xiaomi’s research and development expenditure reached RMB 4.1 billion, a year-on-year increase of 25.7%. The company’s research and development personnel accounted for about 48% of the total number of employees. In the third quarter, the ASP of Xiaomi smartphones in mainland China increased by about 9% year-on-year, and the shipment of smartphones above RMB 3,000 achieved a year-on-year growth of about 14%.
Since the first three quarters, Xiaomi has released two high-end mobile phones, Xiaomi 12S Ultra and Xiaomi MIX Fold 2. According to Xiaomi, as of October 19, the favorable ratings of the two high-end models on the Jingdong platform reached 98.5% and 99.6%, respectively. However, the positive ratings of high-end products did not significantly boost Xiaomi’s overall sales.
“To be a high-end brand, the idea of quick victory is not correct.” Wang Xiang believes that Xiaomi has strategic patience and does not expect to be able to gain a firm foothold in the high-end market through one or two products. In the future, it will use the experience it has learned to continue to promote high-end market. At the same time, Wang Xiang said that Xiaomi still has a lot of room for competition in overseas high-end markets. Despite the current uncertainties, Xiaomi’s strategic determination is very strong. “No matter what happens, it will proceed steadily.”
According to Wang Xiang, Xiaomi is actively responding to the Indian government’s investigation, and currently has no preparations for it, because Xiaomi’s business in India is still going on normally. At the same time, Xiaomi has successfully unfrozen more than 700 million US dollars of funds frozen by the Indian government, and some of the frozen funds are under negotiation. Xiaomi’s business progress and factory production in India are also proceeding normally.
In the third quarter, Xiaomi also made substantial progress in making cars.
According to the financial report, Xiaomi invested 829 million yuan in the automotive business this quarter, and in the first and second quarters, Xiaomi invested a total of 1.865 billion yuan in car manufacturing. At the same time, Xiaomi’s research and development expenses in the third quarter increased by 8.1% from the previous quarter to 4.1 billion yuan, mainly due to the increase in research and development expenses related to car manufacturing.
Wang Xiang said that for Xiaomi’s goal of mass production in 2024, the company is progressing very smoothly, and the number of car teams has reached 1,800. In addition, Xiaomi’s investment in the automotive business has been carefully calculated and will not have a major impact on the group’s operations at present.
According to the statistics of China National Finance Securities, since the official announcement of building cars in March last year, Xiaomi has begun to invest heavily in companies in the electric vehicle industry chain. By the end of September 2021, Xiaomi has invested in 62 companies in the field of smart cars, including 17 companies in smart driving, 13 companies in smart electric vehicles, and 6 companies in smart cockpits.
In the battery supply chain, Xiaomi has invested in many leading companies in the industry, including Honeycomb Energy, Zhongxinhang, Ganfeng Lithium Battery, Weilan New Energy and Zhuhai Guanyu.
(This article is the first release of Titanium Media App, author | Rao Xiangyu, editor | Zhong Yi)Return to Sohu to see more
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