Xiaomi's fourth-quarter revenue of 66.05 billion yuan, smartphone shipments fell nearly 26%

Focus:

• 1Xiaomi Group's revenue in the fourth quarter was 66.047 billion yuan, down 22.8% from 85.575 billion yuan in the same period last year.
• 2 Xiaomi Group's net profit in the fourth quarter was 3.142 billion yuan, an increase of 28.6% from 2.443 billion yuan in the same period of the previous year.
• 3 Not measured in accordance with IFRS, Xiaomi Group's adjusted net profit in the fourth quarter was 1.461 billion yuan, down 67.3% from 4.473 billion yuan in the same period last year.
• 4Xiaomi Group's smartphone business revenue in the fourth quarter was 36.672 billion yuan, down 27.3% from 50.464 billion yuan in the same period of the previous year;
• 5 Xiaomi Group shipped 32.7 million smartphones in the fourth quarter, down 25.9% from 44.1 million units in the same period last year.

Tencent Technology News News on March 24, Xiaomi Group released the company's fourth quarter and full year financial results for the fourth quarter and year ended December 31, 2022 on Friday. According to the financial report, Xiaomi Group's revenue in the fourth quarter was 66.047 billion yuan, down 22.8% year-on-year; net profit was 3.142 billion yuan, a year-on-year increase of 28.6%; Not measured in accordance with IFRS, Xiaomi Group's adjusted net profit in the fourth quarter was 1.461 billion yuan, down 67.3% year-on-year. (Direct hit performance meeting |.) Xiaomi Auto successfully completed the winter test, can it be mass-produced smoothly in the first half of next year? ）

First, the revenue and profit both exceeded market expectations

1. Revenue exceeds market expectations

Xiaomi Group's revenue in the fourth quarter was 66.047 billion yuan, down 22.8% from 85.575 billion yuan in the same period last year. Although Xiaomi Group's revenue in the fourth quarter fell year-on-year, it was still better than market expectations. Data provided by Factset shows that market analysts had on average expected Xiaomi Group's fourth-quarter revenue to be 65.548 billion yuan.

2. Profits exceed market expectations

Xiaomi Group's net profit in the fourth quarter was 3.142 billion yuan, an increase of 28.6% from 2.443 billion yuan in the same period last year. In the fourth quarter, the change in fair value of Xiaomi Group's investments in fair value profit and loss decreased by 2.9% to $3.8 billion from RMB3.9 billion in the fourth quarter of 2021. Not measured in accordance with IFRS, Xiaomi Group's adjusted net profit for the fourth quarter was 1.461 billion yuan, down 67.3% from 4.473 billion yuan in the same period last year.

Xiaomi Group's net profit in the fourth quarter exceeded market expectations. Data provided by Factset showed that market analysts had expected, on average, that Xiaomi Group's net profit in the fourth quarter would be 1,430.8 million yuan, not measured in accordance with IFRS.

3. Overall review

In 2022, Xiaomi Group's total revenue will reach 280 billion yuan, and adjusted net profit will reach 8.5 billion yuan. In the current year, the expenses for innovative businesses such as smart electric vehicles were 3.1 billion yuan. In the fourth quarter of 2022, Xiaomi Group's total revenue reached 66 billion yuan, and the adjusted net profit was 1.5 billion yuan, including 1.2 billion yuan in expenses for innovative businesses such as smart electric vehicles, and about 700 million yuan in one-time cost impact caused by updating the after-sales service policy of some series of smartphones in November 2022 to improve the after-sales service experience of consumers.

According to Canalys data, global smartphone shipments in 2022 fell 11.7% year-on-year, the lowest value in 9 years. Xiaomi Group shipped 150.5 million smartphones worldwide throughout the year. According to Canalys data, Xiaomi Group ranks third in the global smartphone shipment ranking, with a market share of 12.8%. In December 2022, the number of monthly active users of MIUI worldwide reached 582.1 million, a year-on-year increase of 14.4%. As of December 31, 2022, the number of connected IoT devices (excluding smartphones, tablets and laptops) on Xiaomi Group's AIoT platform reached 589.4 million, a year-on-year increase of 35.8%.

In 2022, Xiaomi Group's overseas market revenue will be 137.8 billion yuan, accounting for 49.2% of the total revenue. According to Canalys data, in 2022, Xiaomi Group ranked in the top three in smartphone shipments in 54 countries and regions around the world, and in the top five in shipments in 69 countries and regions around the world.

In 2022, the company's R&D expenditure will reach 16 billion yuan, with a compound growth rate of 38.4% from 2017 to 2022; It is expected that the total R&D investment in five years (2022 to 2026) will exceed 100 billion yuan. As of December 31, 2022, R&D personnel accounted for approximately 50% of the total number of employees.

2. Financial Summary

1. The revenue of each business declined

In the fourth quarter of 2022, the revenue of all businesses of Xiaomi Group declined year-on-year. Among them, the revenue of smartphone business was 36.672 billion yuan, down 27.3% from 50.464 billion yuan in the same period of the previous year, mainly due to the decline in smartphone shipments and average selling prices. Xiaomi Group's smartphone shipments decreased by 25.9% from 44.1 million units in the fourth quarter of 2021 to 32.7 million units in the fourth quarter of 2022, mainly due to the weak overall smartphone market demand due to the repeated Chinese mainland novel coronavirus epidemic and the global macroeconomic environment, as well as the strengthening of efforts to clean up inventory in overseas markets. The average selling price of smartphones decreased by 2.0% from RMB1,143.6 per unit in the fourth quarter of 2021 to RMB1,121.0 per unit in the fourth quarter of 2022. The year-over-year decline in average selling prices of smartphones was mainly due to enhanced efforts to clear inventories in overseas markets, partially offset by changes in the release schedule of Chinese mainland high-end smartphone products in the fourth quarter of 2022.

Revenue from IoT and consumer products was RMB21,447 million, down 14.4% from RMB25,067 million in the same period last year, mainly due to reduced demand for smart TVs and some consumer products, partially offset by higher revenue in the tablet and smart home appliance categories. Revenue from Smart TVs and Notebooks decreased by 24.9% to $6.5 billion in Q4 2022 from $8.7 billion in Q4 2021, mainly due to lower shipments and average selling prices of Smart TVs, partially offset by higher notebook ship volume. Xiaomi Group's revenue from smart home appliances (including smart air conditioners, refrigerators and washing machines) maintained a strong momentum, with revenue increasing by 39.9% year-on-year. Tablet maintained its strong growth momentum, with revenue up 39.1% year-over-year, primarily due to higher shipments of Chinese mainland, a record quarterly high.

Internet services revenue was $7,171 million, down 1.4% from $7,270 million in the same period last year, mainly due to lower revenue from advertising and fintech business, partially offset by higher revenue from TV value-added services and games. The number of MIUI monthly active users of Xiaomi Group increased by 14.4% from 508.9 million in December 2021 to 582.1 million in December 2022.

Other revenue was $757 million, down 72.7% from $2,775 million in the same period last year, mainly due to lower income from the sale of buildings.

2. Net profit increased year-on-year

Xiaomi Group's gross profit in the fourth quarter was 11.4 billion yuan, down 22.4% from 14.7 billion yuan in the same period of the previous year; Gross profit was 17.2%, slightly higher than 17.1% in the year-ago quarter. Among them, the gross margin of Xiaomi Group's smartphone business in the fourth quarter was 8.2%, less than the 10.1% in the same period of the previous year; The gross margin of the IoT and Consumer Products business was 14.3%, up from 13.0% in the same period last year, and the gross margin of Internet services was 71.5%, down from 76.1% in the same period last year.

Xiaomi Group's change in the fair value of investments recorded in profit or loss at fair value decreased by 2.9% from revenue of RMB3.9 billion in the fourth quarter of 2021 to RMB3.8 billion in the fourth quarter of 2022.

Net income from investments recorded under the equity method changed from a net profit of $247.1 million in the fourth quarter of 2021 to a net profit of $3.6 million in the fourth quarter of 2022, mainly due to the diluted income of certain investee companies (e.g. Kingsoft Cloud's diluted income) in the fourth quarter of 2021.

Xiaomi Group's net profit in the fourth quarter was 3.142 billion yuan, an increase of 28.6% from 2.443 billion yuan in the same period last year. Not measured in accordance with IFRS, Xiaomi Group's adjusted net profit for the fourth quarter was 1.461 billion yuan, down 67.3% from 4.473 billion yuan in the same period last year.

3. Operating expenses increased slightly year-on-year

Xiaomi Group's R&D expenditure in the fourth quarter increased by 22.0% from RMB3.9 billion in the fourth quarter of 2021 to RMB4.7 billion in the fourth quarter of 2022, mainly due to the increase in expenses for innovative businesses such as smart electric vehicles.

Sales and promotion expenses decreased by 6.4% from $6.3 billion in the fourth quarter of 2021 to $5.9 billion in the fourth quarter of 2022, mainly due to lower logistics expenses.

Administrative expenses remained stable at $1.3 billion in the fourth quarter of 2022 compared to the fourth quarter of 2021, mainly due to a decrease in executive compensation, partially offset by an increase in the provision for credit loss on receivables.

Xiaomi Group's cost of sales in the fourth quarter was 54.7 billion yuan, down 22.9% from 70.9 billion yuan in the same period last year. Among them, the cost of sales of smartphone business was 33.7 billion yuan, a decrease of 25.7% from 45.3 billion yuan in the same period of the previous year. Cost of sales of IoT and consumer products was RMB18.4 billion, down 15.6% from RMB21.8 billion in the same period of the previous year. Cost of sales of Internet services was $2.0 billion, up 17.2% from $1.7 billion in the same period last year.

4. Reduced cash on paper

On 4 December 2020, Xiaomi Group completed the placing of a total of 1,000,000,000 placing shares owned by Smart Mobile Holdings Limited to not less than six placers (itself and its ultimate beneficial owners are independent third parties) at a price of HK$23.70 per placing share, and allotted and issued 1 to Smart Mobile Holdings at a price of HK$23.70 per subscription share pursuant to the general mandate. 000,000,000 subscription shares.

In addition to the funds raised through the July 2018 global offering, the placement in 2020 and the subscription and issuance of bonds, Xiaomi Group mainly used cash from operations and bank borrowings to meet its cash needs. As at 31 December 2022 and 30 September 2022, cash and cash equivalents were $27.6 billion and $28.1 billion, respectively.

3. Performance analysis in 2022

Xiaomi Group's total revenue in 2022 was 280 billion yuan, a decrease of 14.7% from 328.3 billion yuan in the same period of the previous year. Among them, the revenue of smart phone business was 167.2 billion yuan, a decrease of 19.9% from 208.9 billion yuan in the same period of the previous year; Internet of Things and Consumer Goods revenue was RMB79.8 billion, down 6.1% from RMB85.0 billion in the same period last year; Internet services revenue was RMB28.3 billion, up 0.4% from RMB28.2 billion in the same period last year. Other revenue was $4.7 billion, down 24.6% from $6.2 billion in the same period last year.

Xiaomi Group's cost of sales in 2022 was 232.5 billion yuan, a decrease of 13.9% from 270 billion yuan in the same period of the previous year. Among them, the cost of sales of smartphone business was 152.2 billion yuan, a decrease of 17.3% from 184 billion yuan in the same period of the previous year; Cost of sales of IoT and consumer goods was RMB68.3 billion, down 7.6% from RMB73.9 billion in the same period last year. Cost of sales of Internet services was RMB8.0 billion, up 9.0% from RMB7.3 billion in the same period last year. Cost of sales of other businesses was $3.9 billion, down 18.4% from $4.8 billion in the same period last year.

Xiaomi Group's gross profit in 2022 was 47.6 billion yuan, down 18.3% from 58.3 billion yuan in the same period of the previous year; Gross profit was 17.0%, down from 17.7% in the year-ago quarter. Among them, the gross margin of the smartphone business was 9.0%, less than the 11.9% in the same period of the previous year; The gross margin of the Internet of Things and Consumer Products business was 14.4%, up from 13.1% in the same period last year, and the gross margin of Internet services was 71.8%, down from 74.1% in the same period last year.

Xiaomi Group's R&D expenditure in 2022 increased by 21.7% from RMB13.2 billion for the year ended 31 December 2021 to RMB16.0 billion in the reporting period, mainly due to the increase in expenses for innovative businesses such as smart electric vehicles.

Sales and promotion expenses increased by 1.6% to $21.3 billion for the reporting period from $21 billion for the year ended 31 December 2021, mainly due to higher salaries of sales and promotion staff, partially offset by lower logistics expenses. Publicity and advertising expenditure remained stable at $7.2 billion for the reporting period and for the year ended 31 December 2021.

Xiaomi Group's administrative expenses in 2022 increased by 7.9% from RMB4.7 billion for the year ended 31 December 2021 to RMB5.1 billion in the Reporting Period, mainly due to increased provision for executive salaries and credit losses on receivables.

The change in the fair value of investments in gain or loss at fair value changed from a gain of $8.1 billion for the year ended 31 December 2021 to a loss of $1.7 billion for the reporting period, mainly due to a fair value loss on listed equity investments.

Net investment (loss)/profit recorded under the equity method changed from a net profit of $275 million for the year ended 31 December 2021 to a net loss of $400 million for the reporting period, mainly due to the diluted income of certain investee companies (e.g. Kingsoft Cloud's diluted income) in 2021.

Other income increased by 37.3% to $1.1 billion in the Reporting Period from $0.8 billion for the year ended 31 December 2021, mainly due to an increase in government subsidies.

Xiaomi Group's net profit in 2022 was 2.5 billion yuan, compared to 19.3 billion yuan in 2021. Not measured in accordance with IFRS, Xiaomi Group's net profit in 2022 was 8.5 billion yuan, compared to 22 billion yuan in 2021.

4. Stock price performance

Xiaomi Group shares rose HK$0.22, or 18.0 per cent, to close at HK$12.44 in regular trading on the Hong Kong Stock Exchange on Friday. In the past 52 weeks, Xiaomi Group's lowest share price was HK$8.31 and the highest share price was HK$14.94. According to Friday's closing price, Xiaomi Group's market value is about HK$310.8 billion. (Mowgli)