Daily Management Review

Quarterly loss of Xiaomi exceeded $ 1 billion


06/15/2018


The Chinese manufacturer of gadgets Xiaomi reported on the results of activities for the first quarter of this year. During the period from January to March 2018, the company incurred a net cash loss of 7 billion yuan, which is about $ 1.09 billion. The losses reached 43.89 billion yuan (about $ 6.85 billion) for the whole of last year.



Jon Russell
Jon Russell
Revenue for the quarter was 34 billion yuan ($ 5.3 billion). Net profit for the quarter was 1.04 billion yuan ($ 162 million). The profit for the past year was 3.9 billion yuan ($ 608 million). This year, the company demonstrated the growth of smartphone sales by an impressive 88%; at that, most of this growth was achieved thanks to foreign markets.

In the first three months of 2018, Xiaomi generated revenue of 34 billion yuan ($ 5.3 billion), thanks to an 88% increase in smartphone sales (the main growth was in foreign markets). The company completed 2017 with sales of 114.6 billion yuan.

Xiaomi explained the last year's losses by revision of the fair value of the convertible redeemable preference shares.

Approximately 70% of Xiaomi's revenue for 2017 came from smartphone sales. Various "smart" devices accounted for 20% of the turnover, and the remaining 10% came from Internet services.

The telephone business of the company still does not have a high profitability. In 2017, the gross profit margin of Xiaomi from smartphone sales was only 8.8%, while the indicator was 60%in the service business (games, advertising, MIUI user interface, etc.). For comparison, Apple's profit margin from the flagship smartphone sales exceeds 60%.

The revenue of Xiaomi is growing thanks to active international expansion. In 2017, foreign markets brought the company 28% of sales against 6.1% in 2015.

According to analysts at Counterpoint Research, in 2017 Xiaomi doubled the supply of smartphones and took the fourth place in terms of shipments of these devices, despite the slowdown of the whole market.

Recall, the Chinese manufacturer is preparing for the initial public offering of shares (IPO). The first application for sales on the Hong Kong stock exchange has already been submitted. It is expected that the IPO will bring Xiaomi at least $ 10 billion, and the market value of the company will increase from $ 70 billion to $ 90-110 billion.

It is assumed that this IPO will be the largest for the last four years at the global level. Xiaomi wants to enter the stock exchange in late June or early July 2018.

source: reuters.com

 






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