Emir BardakçıDuring the Q3 2024 performance meeting, Lu Weibing, President of Xiaomi Group and General Manager of Xiaomi Brand, admitted that “some ups and downs happened in our Mobile Phone business during the third quarter of this year”, due to the main impacts of rising memory prices as well as the product release cycle on quarterly gross profit margin.
Key Takeaways from Q3 Performance Meeting
- Memory Price Hike: High price for memories in Q3 drove up supply chain prices and accordingly pressured the gross profit margin for mobile phones. • Product Release Cycle: Timing of new product launches occurs, by nature, means profitability is impacted as this business is cyclic in nature.
- Gross profit margin decline: Xiaomi’s mobile phone business realized a gross profit margin of 11.7% in Q3 2024, down 4.9 percentage points year on year.
- Outlook for Q4 Lastly, Lu Weibing expects decreasing supply chain costs during the fourth quarter now that memory prices are normalizing. The company also expects improved gross profit margins from the mobile phone segment in Q4, indicating much better financial performance ahead.
Xiaomi Strategy between Fluctuations
He emphasized that these fluctuations of the supply chain were under the control of Xiaomi and also part of the market cycle. Xiaomi has stated that it remains assured in adapting to such shifting sands while maintaining competitive pricing in concert with improving margins.
Indeed, this optimism is corroborated by the fact that Xiaomi has recently expanded its product line with the Xiaomi 14 series and the Redmi K80 series, aimed at boosting sales in Q4.
Q3 2024 Financial Highlights
- Gross Profit Margin: 11.7% for the mobile phone business.
- Performance of Revenue: The financial report information in Q3 points out a couple of the main aspects that outline supply chain optimization and strategic launches for product development, considering continuity of growth.
Emphasis on cost management and timely issuance of innovative products helped Xiaomi remain resilient in the competitive market-a promising tone for both the fourth quarter and beyond.
