(Yicai Global) May 25 -- Xiaomi returned to profit in the first quarter thanks to cost-cutting efforts, though revenue fell as the Chinese smartphone maker sold fewer handsets amid subdued consumer demand.
Net profit was CNY4.2 billion (USD594.5 million) in the three months ended March 31, versus a net loss of CNY587 million (USD83.1 million) a year earlier, the Beijing-based firm’s financial scorecard showed yesterday. Revenue fell 18.9 percent to CNY59.5 billion (USD8.4 billion).
“Thanks to the concerted efforts across the group, our 2023 operating strategy of dual emphasis on scale and profitability began to bear fruit in the first quarter,” Chief Financial Officer Alain Lam said on the firm’s earnings conference call.
Revenue from smartphone sales plunged 23.6 percent to CNY35 billion, as phone shipments fell 21.1 percent to 30.4 million, while the average price of a Xiaomi phone rose over 18 percent in the Chinese mainland.
The company’s global handset shipments fell 13.3 percent in the period to the lowest since 2014, according to data from Singapore-based market research institute Canalys.
Xiaomi’s shares [HKG: 1810] rose 1 percent to close at HKD10.50 (USD1.34) each in Hong Kong today, after earlier gaining by as much as 5.2 percent.
In the first quarter, Xiaomi’s user interface Miui notched up a new global monthly active users record of 594.8 million, a 12.4 percent increase from a year earlier.
Adjusted net profit rose 13.1 percent to CNY3.2 billion in the first quarter, buoyed by a decline in costs, Xiaomi said. The firm’s gross margin widened to a record 19.5 percent.
Xiaomi cut sales costs by 21 percent to CNY47.9 billion, with spending on sales and promotions down 22 percent to CNY4.1 billion and administration costs down 8.8 percent to CNY1.1 billion. Research and development outlays jumped 17.7 percent to CNY4.1 billion.
Xiaomi will actively embrace large language models, President Lu Weibing said. Unlike OpenAI, Xiaomi will not go in for generic LLMs, but will integrate them into various businesses to increase internal efficiency with the help of artificial intelligence technologies, Lu noted.
In April, Xiaomi formally set up an AI lab LLMs team that now has 1,200 staff, it also said yesterday.
Editors: Xu Wei, Futura Costaglione