The Chinese technology Xiaomi doubled its profits in 2020, the year in which it sold 17.5% more smartphones in part thanks to the fall from grace of one of its main rivals, Huawei, due to the effect of the United States sanctions.
According to the income statement that the company submitted this Wednesday to the Hong Kong Stock Exchange, the net profit stood at 20,356 million yuan (US $ 3,122 million, € 2,639 million) in 2020, which represents an increase of 102.7% compared to the previous year.
However, Xiaomi also offers an adjusted calculation of the results that excludes, among other factors, the effects of changes in the value of the company’s investments, and would leave the net profit at 13,006 million yuan (US $ 1,995 million, € 1,686 million), 12.8% higher than the same figure in 2019.
In the last two years, the technology company has already prepared alternative calculations before the multimillion-dollar premium granted in 2018 to its CEO, Lei Jun, which caused the net profit to fall by 25.9% in 2019 despite the fact that its turnover increased by 17.7%.
In 2020, Xiaomi’s revenue rose by 19.4%, to 245,866 million yuan (US $ 37,711 million, € 31,872 million).
Smartphones and international markets
The company continues to receive most of its turnover from its smartphone business, which went from reporting 59.3% to 61.9% of the total, after revenues from that segment rose 24.6% year-on-year.
On the other hand, the income derived from the so-called “lifestyle products and the internet of things (IoT)”, which range from televisions and laptops to air purifiers or robot vacuum cleaners, advanced less, by 8.6%, and fell from 30.2% of the total to 27.4%.
Billing for internet services, which still represents less than 10% of the total, rose 19.7% in 2020, mainly thanks to advertising and games.
Regarding the geographical distribution, China continues to be the main market for Xiaomi although, if the trend continues, it may soon cease to be the case: in 2019 its weight was 55.7% of total income and in 2020, 50.2% , while the remaining 49.8% already comes from foreign markets.
Turnover in other countries – Xiaomi sells products in more than a hundred territories – rose 34.1% in 2020.
Spain is one of the most important international markets for technology and, according to data from the Canalys consultancy -reference in the sector-, Xiaomi reached a 27% market share in the fourth quarter, the fourth consecutive in which it was ranked number one in smartphone sales.
Likewise, the company highlights the role of Latin American countries among its emerging markets, reaching the fourth position in sales in the fourth quarter, which represents a growth of 215% and reports a market share in that territory of 9.1%, while in the same period of 2019 it was 2.7%.
A positive 2020 and a scare at the start of 2021
Xiaomi experienced a positive 2020 and this was reflected in the valuation of its shares in Hong Kong, which rose more than 200% throughout the year, especially strongly in the last quarter.
Part of the optimism of its investors was due to the fact that in those last three months, the global share of the smartphone market of its rival Huawei plummeted due to the sanctions imposed by Washington – which prevent it, among other things, from accessing the operating system. Android-, falling for the first time in six years from the ‘top 5’ of sellers.
In fact, among the top five, Xiaomi was the one that grew the most in the last quarter, increasing its sales by 31%, a milestone that was also transferred to the global of the year, growing by 19% in an adverse context, since sales worldwide smartphones were down 7%, according to Canalys.
However, after the joy of the end of 2020 came the unexpected inclusion, in mid-January, of Xiaomi in a blacklist drawn up by the US of companies with alleged links to the Chinese Army – which the firm always denied -, which that was accompanied by the prohibition for American investors to buy its shares.
This meant that Xiaomi’s shares lost more than 33% of their value in less than two months and prompted its board to announce, on March 12, a share buy-back plan valued at HK $ 10 billion (US $ 1,289). million, € 1,077 million) to demonstrate confidence.
However, a day later an American judge agreed with an appeal filed by Xiaomi against Washington’s decision, considering that the arguments that would prove the alleged links with the Chinese Armed Forces were “deeply flawed”, and since then the actions of the company have risen almost 24%.
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