(Yicai) March 20 -- Xiaomi, the Chinese smartphone and electronics giant poised to start delivering its first electric vehicles this month, said profit increased seven times last year, while revenue fell on the back of a drop in handset sales.

Net profit surged 598 percent to CNY17.5 billion (USD2.43 billion) in the 12 months ended Dec. 31, the Beijing-based firm's earnings report showed yesterday. Revenue fell 3.2 percent to CNY271 billion (USD37.6 billion). Adjusted net profit climbed 126 percent to CNY19.3 billion.

Smartphone sales dropped 5.8 percent to CNY157.5 billion, despite shipments reaching 145.6 million thanks to low pricing, ranking Xiaomi third globally with a 12.8 percent market share, it said, citing figures from market research firm Canalys.

“Throughout 2023, we diligently executed our key operating strategy of ‘dual emphasis on scale and profitability,’” Xiaomi said. “As we maintained our industry-leading position globally, we emphasized on enhancing our capabilities, optimizing our operating efficiency and driving improvements in profitability.”

Fourth-quarter revenue climbed 10.9 percent to CNY73.2 billion thanks to strong phone sales, while adjusted net profit gained 236 percent to CNY4.9 billion.

“We continue to expand our global footprint,” Xiaomi said. Overseas revenue reached CNY121.8 billion last year, accounting for 45 percent of its total. The firm’s share of the phone market rose 1.3 percentage point in the Middle East, 1.2 point in Latin America, and 2.4 points in Africa, according to Canalys, and it ranked in the top three in 51 countries and regions.

Revenue from Internet of Things and lifestyle products rose 0.4 percent to CNY80.1 billion, while income from services jumped 6.3 percent to CNY30.1 billion. Gross profit margin reached a record high of 74 percent. 

Xiaomi has pumped billions of yuan into its foray into China’s fiercely competitive EV market, with co-founder Lei Jun vowing to spend USD10 billion on the firm’s auto business over a decade. Xiaomi spent CNY6.7 billion on it and other new initiatives last year, including CNY2.4 billion in the fourth quarter.

The company’s much-anticipated first car, the SU7, will launch on March 28 and be slightly expensive, President Lu Weibing said on its earnings conference call. Xiaomi aims to take third place in the pure electric luxury sedan segment, he added. 

Lei also unveiled Xiaomi’s super factory for cars on Weibo yesterday. Board members have been given a sneak peek of the plant and have taken the SU7 on test drives.

Shares of Xiaomi [HKG: 1810] closed 2.4 percent lower at HKD14.50 (USD1.85) each in Hong Kong today. The Hang Seng Index was little changed. The stock has gained about 30 percent over the past 12 months.

Editor: Martin Kadiev