Smartphone producer Xiaomi states China sales already close to full recovery amid Coronavirus crisis

The coronavirus outbreak has claimed the lives of more than 3,000 people in China and over 37,000 worldwide

The Chinese smartphone maker Xiaomi Corp is witnessing signs of sales recovery in China, it stated on Tuesday as the nation starts to return to normal life following the coronavirus or COVID-19 lockdown.

"The (Chinese) market has entered a full recovery stage, and... has already recovered to 80 to 90% of the normal level," the Chief Financial Officer Shou Zi Crew stated on an earnings call. He mentioned that sales in China fell in the first quarter because of the economic impact of the virus, but did not stay by how much.

Demand for smartphones to be resilient globally: Chew

Xiaomi Mi 9T
Xiaomi Mi 9T

Chew said he expected demand for smartphones to be resilient globally even though the virus was spreading to other countries. The company will take a hit in global sales during March and April, he said, but expects to see signs of recovery in May. "If we take reference from China's experience, I think smartphone demand is resilient," said Chew. "I think it will rebound quickly."

Xiaomi reported on Tuesday a 27 percent jump in revenue for October-December 2019, above analysts' expectations. Sales in the fourth quarter jumped to 56.5 billion yuan ($8 billion) from 44.42 billion yuan a year earlier, beating analysts' expectations of 55.6 billion yuan, according to Refinitiv data.

The company derives roughly 60 percent of its revenue from mobile handsets, and also sells online ads and other consumer hardware. Revenue from smartphones jumped 23 percent in the period to 30.8 billion yuan. Excluding one-time items, Xiaomi earned 2.34 billion yuan in the fourth quarter, above analysts' estimates of 1.88 billion.

Xiaomi's profit attributable to shareholders fell by a quarter

For the whole year, Xiaomi's profit attributable to shareholders fell by a quarter to 10.04 billion yuan. Rival Huawei reported a 5.6 percent annual profit increase on Tuesday, its smallest rise in three years, hurt by weak overseas sales as the United States campaigned to restrict its global expansion on security grounds.

Overseas growth has been a key strategy for Xiaomi and other Chinese rivals in recent years as the domestic smartphone market has seen a period of contraction. The coronavirus, which first appeared in Wuhan, China, has killed more than 37,000 globally and forced countries to lock down borders and curb movement. Businesses have been hurt by supply disruptions and factory shutdowns.

Analysts expect first-quarter smartphone shipments to China to decline by roughly 40% from a year earlier. Apple warned last month it was unlikely to meet its March quarter sales guidance as the ramp-up of Chinese factories that produce iPhones was slower than expected after weeks of closures.

Xiaomi, which unveiled a new flagship 5G smartphone, the Redmi K30 Pro, said on March 19 that 80 percent of its supply chain had resumed operations. Chinese smartphone makers are hoping the domestic market, which has for years contracted, will see new life with the sale of 5G-enabled phones. Counterpoint Research estimates global smartphone sales fell 14 percent in February, and expects a steeper decline after that. Xiaomi is planning an 8 billion yuan bond issue to fund coronavirus prevention efforts, two sources with knowledge of the matter told Reuters last week.

(With agency inputs)

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