Chinese smartphone company Xiaomi reported a steep drop in both revenue and profit for the second quarter as its core smartphone business hit by strict COVID restrictions.
Revenue down 20% year-on-year to 70.2 billion yuan (US$10.3 billion) as its core smartphone business fell 28.5% year on year to 42.3 bullion yuan (US$6.21 billion). Xiaomi’s smartphone shipments down 26.2% from 52.9 million units of same period of last year.
Net income fell 67% to 2.08 billion yuan, also missing analysts' estimates.
Revenue generated by IoT and lifestyle products segment, which includes smart televisions, laptop computers and wearable devices, down 4.5% year-over-year to 19.8 billion yuan (US$2.9 billion) in the second quarter.
The company’s internet services segment, which includes its MIUI software and gaming, down 0.9% year-over-year to 7 billion yuan (US$1.2 billion) in the same period.
Xiaomi blamed the disappointing quarter to weak consumer demand amid the resurgence of the pandemic in China.
“In this quarter, our industry dealt with many challenges that significantly impacted overall market demand, these challenges included rising global inflation, foreign exchange fluctuations, input costs,” said Xiaomi president Wang Xiang during a conference call after the earnings release.
Some Chinese media also reported that Xiaomi is cutting 927 jobs, which equal to 3% of its workforce to keep financial health.
According to research firm Canalys, China's smartphone sector has been especially hit by the downturn, with unit shipments down 10% year on year in the second quarter.
Xiaomi is also facing headwind in overseas markets. In India, Xiaomi's strongest market outside of China, it has been subject to government probes for allegedly dodging tax regulators.
In April, Indian tax authorities seized $725 million in assets from the company, claiming it illegally transferred funds abroad under the disguise of royalty payments. Xiaomi has denied any wrongdoing.