Xiaomi Registration on friday one sharp drop in revenue in the second quarterdue to the contraction of the biggest phone market in the world, China, affected by the strict restrictions of COVID.
Sales dropped 20% compared to last year, up to 70.17 billion yuan (10.3 billion euros).
These results are below estimates and mark a sharper drop than in the previous quarter, when the company recorded its first drop in revenue since going public.
Net profit fell 67% to 2.08 billion yuan (300 million euros), also below analyst estimates.
“In the Chinese market, there was a resurgence of the pandemic, so demand was tough and weak,” Xiaomi president Wang Xiang said in an earnings call.
Wang added that the increase fuel prices, material costs and inflation also affected overseas sales. Net income fell as a result of pressure to liquidate inventories through sales and promotions.
Consumption in China has struggled to recover from the impact of lockdowns in Shanghai and other cities in the first half of the year.
Xiaomi’s smartphone sales, which generate more than half of the company’s total revenue, are down 29%.
A weak smartphone market in China and around the world has prompted the company to look for new opportunities, and earlier this month it said it had begun testing autonomous vehicles in select cities across China.