Xiaomi: The mobile phone business ranked second in Latin America for the first time and stabilized the second place in the Middle East

Xiaomi Group today released its second quarter financial report for 2024: total revenue reached 88.9 billion yuan, a year-on-year increase of 32.0%; net profit was 5.1 billion yuan, compared with 3.7 billion yuan in the same period last year. Adjusted net profit was 6.2 billion yuan, a year-on-year increase of 20.1%.
After the financial report was released, Lu Weibing, partner, president and president of the international business department of Xiaomi Group, Lin Shiwei, vice president, CFO and chairman of Tianxing Digital and other senior executives attended the subsequent financial report conference call to interpret the key points of the financial report and answer digital analysis Teacher’s question.
The following is the transcript of the analyst Q&A session of this conference call: 21st Century Business Herald reporter: I noticed that Xiaomi’s revenue has increased year-on-year for four consecutive quarters, and the growth rate has generally shown an expanding trend. I would like to ask the management behind this What is the reason? What is management's performance outlook for the third quarter and the full year?
Lu Weibing: Let me first talk about the growth you mentioned. Everyone has seen that we have achieved sustained growth for four consecutive quarters, and our growth momentum is still good. As for growth, I have a simple formula here. The growth of an enterprise is ultimately category × market. Category × market means that an enterprise must continuously enter categories that have the potential to expand in the future.
I also mentioned just now that the launch of Xiaomi Motors indicates that Xiaomi’s three curves have formed a complete layout from a category perspective - mobile phones, tablets, wearable personal devices, with the production chain of major home appliances as the core Home equipment, as well as car-centered travel equipment - everyone has also seen that these three growth curves have been completely completed.
In addition, I think the logic from the market perspective is whether we can sell so many products to more markets, so everyone has seen that the global layout of Xiaomi mobile phones is now becoming more and more complete, and the development is more balanced. The better come.
Like this time, we historically won the second place in Latin America for the first time. We have stabilized in the second place in the Middle East. In Southeast Asia, we have returned to the second place. Even in Africa, where we were the weakest, we are still stable. It has a market share of more than ten points, and in my impression its market share has increased by 3.0 percentage points over the same period. This means that today we have the ability to achieve balanced development in different markets around the world, and we can achieve a better market share. Position, this is a simple model of Xiaomi's growth today, and behind this model are Xiaomi's two strategies.
The first strategy is our "Full Ecology of People, Cars and Homes", and the second strategy is our globalization strategy, which means that we will continue to copy Xiaomi's successful practice of "Full Ecology of People, Cars and Homes" in China to the world. Going to various markets, this is the basic underlying logic of our big business. I think in the past few years, we have basically moved forward in accordance with these strategies, but what you see today is the fruition.
As for the third quarter and fourth quarter results that you are concerned about, I think the third quarter is already very specific, so let me talk about the basic outlook for the fourth quarter and the whole year. I think today you can see that Xiaomi's control, predictability and visibility of the entire business are getting better and better, so I think whether it is the third quarter or the fourth quarter, it will basically follow the general trend of continued growth. Let’s go, we are still relatively confident.
Looking at the whole year, I can talk about the mobile phone business. In the first and second quarters, we grew nearly 20 million units year-on-year. Last year, we shipped 146 million units. That is, even if we do not grow in the second half of the year , Xiaomi can also reach 165 million units this year. Among all mainstream brands in the world, 165 million units, I think it should be the fastest growing. In fact, everyone knows very well that mobile phones are an area where the existing market is almost stagnant. In other words, we have added more than 20 million units, which means that other companies may lose more than 20 million units.
In addition, Xiaomi Tablet has reached the fifth place in the world, but the gap between us and the third place is very, very small, so I have been saying internally whether it is possible for us to reach the top three in the world in the third or fourth quarter. In terms of wearable devices, whether it is headphones or watches, Xiaomi has basically achieved the second or third position in the world, and our business development is still very good. Including our major appliances, we should also be able to achieve a growth of more than 40% this year. I think there is no big problem in maintaining the basic growth model of these businesses until the fourth quarter.
In terms of automotive business, we originally announced a delivery target of 100,000 units. Our goal is to complete it in October. We will see whether we can complete 120,000 units throughout the year. In fact, we only have nine months to deliver 120,000 units throughout the year. Because we only started delivering in April. In the automotive industry, I believe this speed must have set a record for the fastest single vehicle delivery in global history. Xiaomi focuses on sound operations. Judging from the company's financial report delivery for multiple consecutive quarters in the past, everyone should be able to basically see this characteristic. Behind this is actually our capacity building, our investment, and technological progress in the past few years. The results in other aspects are also the market’s reward for us.
"Zhifu" Magazine: I would like to ask the management what is the delivery situation of Xiaomi cars so far? In addition, how is the progress of increasing automobile production capacity? Are there any changes to the full-year delivery target?
Lu Weibing: We also disclosed that Xiaomi delivered 27,000 vehicles in the second quarter, but in the three months of the second quarter, that is, April, May, and June, the number of vehicles delivered actually increased month by month. , for example, we delivered more than 10,000 units in June, and now our monthly delivery volume has stabilized at more than 10,000 units.
In addition, we have transformed the production line of the factory some time ago, from single-shift production to double-shift production, which has promoted us to significantly increase the overall production capacity, so it can be said that the volume of our delivery will be There should be continuous improvement every month, so we have adjusted the full-year delivery target to a sprint of 120,000 vehicles. At present, I think we are still confident. I would also like to take this opportunity to thank our supply chain partners. Indeed, after the orders became popular, we also urgently increased orders to them, and they also urgently coordinated our delivery, so the delivery results of Xiaomi Automobile are also The result of the joint efforts of Xiaomi's manufacturing team, as well as our supply chain team and our supply chain partners.
Currently, we are still continuously exploring production capacity, so I think future delivery will be better and better, and we are confident about this. Recently, you have also seen that our order delivery cycle has also been shortened. For the SU 7 Max, we have shortened it by five to six weeks, and the momentum of new orders is also very strong.
Xinhuanet: I would like to ask Mr. Lu, we noticed that Xiaomi’s innovative business including smart electric vehicles had a net loss of 1.8 billion yuan this quarter. We can see that our car and bicycle losses were more than 60,000 yuan. Could you please tell me What are the reasons for Mr. Lu’s losses? What do you think of this loss level?
Lu Weibing: When we released the quarterly report, we also released the gross profit margin of our cars, which is about 15.4%. This gross profit margin still makes many investors, analysts and media friends feel that this is a good gross profit margin level. Referring to the gross profit margin levels of many peers, they may maintain a very low gross profit margin level for a long time.
Everyone has also noticed that the new business still has a loss of 1.8 billion. I think you may also want to know what is the reason for the loss. I think our automobile business has just started today. There are two main reasons for the loss. First, our scale is still relatively small. Automobiles are a typical manufacturing industry that relies on economies of scale. If there is not enough scale, it will be very difficult. The second is that our investment in the first car is very large. Mr. Lei has also said many times that our first car must have 10 times the investment. It will take some time to digest these investments. The above two points are the main reasons for our losses.
In addition, our first car is a pure electric car. Among all models - pure electric cars, pure electric SUVs, extended range or plug-in hybrid SUVs, etc. - the cost of pure electric cars should be said to be The highest point is that batteries are still very expensive. From the perspective of friendliness to gross profit margins, pure electric cars are also the most difficult. The above mentioned are basically the reasons why Xiaomi SU 7 products caused the company's financial losses. However, I believe that as our scale continues to expand in the future, our production capacity continues to be tapped, and our delivery capabilities improve, I believe that our losses will further increase in the future. Narrow.
The Paper: We noticed that in addition to losses, Xiaomi’s overall gross profit margin in new smart electric vehicle business reached 15.4% this quarter. I would like to ask how the management views this gross profit margin level? What is the likely trend of Xiaomi Auto’s gross profit level changing in the future?
Lu Weibing: Recently, automobile companies have released financial reports one after another, and they have also announced their gross profit margin levels. The gross profit margin level of Xiaomi Motors is basically contributed by hardware. If you look at it this way, I think our gross profit margin level is Still good. Gross profit margin is still very important to us. As long as you have a reasonable gross profit margin level, your expenses can be amortized through the expansion of scale. If you don’t have a good gross profit margin level, the larger the scale, the greater the cost. The greater the loss. Regarding the company's gross profit margin level, I also want everyone to compare it with Tesla, which is about 13.9%. You can also horizontally compare the gross profit margin level of some other companies.
For the company’s first car, we think it is quite satisfactory. Behind this gross profit margin, it still reflects several important capabilities of Xiaomi. The first is our supply chain management capabilities. For Xiaomi's first car, the performance of our supply chain is still very good.
The second is our smart manufacturing. After we built our own factory, we have explored the potential of the factory well. The third is the confidence of the supply chain in us. Although it is our first car, our supplier partners are very optimistic about Xiaomi's future, which means that the cost they give us may not be of this magnitude. Shipments may be on a larger scale, but because they are optimistic about Xiaomi, they have given us a lot of cost release in advance. The above aspects have driven us to achieve very good gross profit margin levels.
Regarding the future trend of gross profit margin changes, I think it mainly depends on scale. As long as the scale can grow, costs can be shared. We are relatively confident about this. In the development of our automobile business, we have passed two hurdles. The first hurdle is whether we can sell well after the listing. Everyone has seen that we have been very successful in this regard. The second hurdle is whether we can have sales after the sales are booming. Orders continue to come in. After we experienced a very hot situation in April and May, the order volume in the past three months of 678 is also very good. We now expect that it will get better and better in the future. What we focus on is the future growth scale. A larger scale can promote the continuous reduction of costs, which in turn will promote the continuous improvement of gross profit margin in the future. We are relatively confident about this.
In summary, the development of the automotive business so far has exceeded our expectations, exceeded the industry’s expectations for us, and exceeded the supply chain’s expectations for us. Moreover, our current orders are still very stable, and the situation of new orders It is also very good. Therefore, we are confident in achieving the full-year delivery target, and we are also very confident in the continuous improvement of cost control and gross profit levels throughout the year.

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