Nov. 28 (NBD) -- Chinese smartphone maker Xiaomi Corporation (01810.HK) Wednesday released the financial results for the third quarter of 2019, posting a climbing gross profit margin as well as the slowest quarterly growth for revenue.

Shares of Xiaomi rose by 1.83 percent to close at 8.89 Hong Kong dollars (1.13 U.S. dollars) on Thursday.

The company reaped 53.7 billion yuan (7.6 billion U.S. dollars) of revenue, which is in line with analysts' estimates, representing a year-over-year rise of 5.5 percent but a significant drop compared to 14.8 percent for the previous fiscal quarter.

National Business Daily noticed that Xiaomi's adjusted net profit reached 3.5 billion yuan in the July-September period, up 20.3 percent from a year earlier, and its gross profit margin soared to 15.3 percent from 12.9 percent in the same quarter of 2018.

Photo/Liu Chunshan (NBD)

The slowdown of the company's revenue increase for the third quarter was partly due to the decreased performance of its smartphone business, which contributed 61.6 percent of Xiaomi's total revenue. 

Statistics from research firm Gartner disclosed that Xiaomi, which stood at the fourth place in terms of worldwide smartphone sales, sold 32.27 million handsets in the quarter, about half the sales of its major Chinese counterpart Huawei at the second spot, representing a fall of 2.8 percent year on year.

Xiaomi's smartphone business thus saw the first-ever negative growth in revenue, the latest report showed. The revenue of its smartphone segment slid by 8.5 percent to 32 billion yuan in the three months ended September 30.

Xiaomi CFO Shou Zi Chew noted in the conference call the entire smartphone market is facing challenge amid the evolvement of the whole mobile phone industry that is embracing the transition from 4G to 5G technology. Because of the changes, Xiaomi adopted a conservative strategy in terms of new product release and smartphone supply.

In efforts to maintain its edge in the smartphone sector, Xiaomi has been carrying out multi-brand strategy while conducting R&D on 5G products.

By operating both Xiaomi and Redmi brands, the smartphone vendor is able to offer various product lines that cover a wide price range and target different groups of consumers. With adjustment for product mix for different sales regions, the average selling price of the company's smartphones sold in the markets outside China fell 4.1 percent year on year.

Xiaomi also mentioned it plans to launch 10 or more 5G smartphone models in 2020 to woo consumers who are wishing to switch to 5G.

Though facing pressure from the smartphone market, Xiaomi made more gains from the IoT business which is seen as the firm's another growth engine.

The revenue generated by Xiaomi's IoT and lifestyle products surged by 44.4 percent to 15.6 billion yuan in the third quarter, which was largely contributed by sales of smart TVs. A total of 3.1 million Xiaomi smart TVs were shipped globally in the period, making the tech company the fifth TV vendors in the world, according to data provider All View Cloud.

As of September 30, 2019, the number of IoT devices (excluding smartphones and laptops) connected to Xiaomi's IoT platform topped 213.2 million units, up 62 percent year on year.

It is noted that the company still faces intense rivalry in the IoT market as tech firms such as Alibaba, Huawei and OnePlus are also scrambling for a bigger presence in the sector.

Email: lansuying@nbd.com.cn