Core Viewpoint - The company has lowered its revenue and adjusted net income forecasts for Q3 2025 due to pressures in smartphone shipments, competition, and subsidy tightening, but maintains a positive outlook on mid-term growth sustainability [1]. Group 1: Smart EV Business - The elevated YU7 SUV mix is expected to improve the product mix and raise the average selling price (ASP) to RMB 260,000, with the smart EV segment projected to achieve its first profitable quarter with a GAAP net profit of RMB 700-800 million [2]. - Xiaomi's limited-time subsidy program of up to RMB 15,000 for locked orders is seen as a strategic move to align with peers amid government tax benefit reductions, although potential profit erosion from this policy is viewed as manageable [2]. Group 2: Smartphone Market - Xiaomi's global smartphone shipments reached 43.5 million units in Q3 2025, reflecting a 2% year-over-year increase, with a decline in shipments in China attributed to subsidy tightening and a lack of new products [4]. - The company has adjusted its gross profit margin (GPM) forecasts for smartphones downward by 0.3-0.6 percentage points for 2025-2027 due to anticipated upward pressure on DRAM and NAND prices [4]. - Premiumization efforts are expected to help Xiaomi manage pricing pressures, with a 30% increase in cumulative shipments of the Xiaomi 17 series compared to the previous generation, and over 80% of these shipments attributed to Pro versions [5].

Financial Data and Key Metrics Changes - For Q4 2024, the company reported sales of $2.8 billion and EBITDA of $416 million, representing a 7% increase in EBITDA compared to Q4 2023's EBITDA of $390 million [17][24] - Full year 2024 net income was $677 million, with EBITDA totaling $2.3 billion, while total sales for 2024 declined by 3% to $12.1 billion due to a 10% decline in average sales prices [25][26] - The company achieved total cost reductions of $170 million in 2024, exceeding the target of $125 million to $150 million [16][32] Business Segment Data and Key Metrics Changes - The Housing and Infrastructure Products (HIP) segment achieved record income from operations of $807 million and an EBITDA margin of 24%, driven by an 8% sales volume growth [20][28] - The Performance and Essential Materials (PEM) segment saw a 1% increase in sales volume, primarily due to export market demand, although average sales prices were impacted by industry capacity increases [18][30] - HIP's EBITDA margin improved to 19% in Q4 2024, while PEM's EBITDA margin increased to 12% from 11% in the same period of 2023 [27][31] Market Data and Key Metrics Changes - North America showed strong demand across both segments, supported by a broad product portfolio and a strong feedstock position [19] - The company expects housing starts for 2025 to remain similar to 2024 at 1.3 million [33] Company Strategy and Development Direction - The company is focused on sustainability and has initiated several key projects, including a pilot program for post-consumer recycled PVC and investments in carbon waste transformation technology [36][37] - The company plans to continue optimizing its business to drive operational performance and reduce costs, with a target of $125 million to $150 million in cost reductions for 2025 [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the HIP segment, citing strong brand offerings and geographical reach [39][41] - The company acknowledges uncertainties in the global macroeconomic environment but remains focused on actions within its control to improve business performance [41] Other Important Information - The company returned approximately $325 million to shareholders through dividends and share repurchases in 2024 [21][32] - As of December 31, 2024, the company had $2.9 billion in cash and cash equivalents, with total debt of $4.6 billion [31] Q&A Session Summary Question: Insights on HIP margins and expected degradation - Management indicated that margin guidance reflects a product mix shift rather than a decline in overall demand [49] Question: Cost cuts distribution across divisions - Cost reduction efforts will be significant in both HIP and PEM segments, particularly in logistics and procurement [52] Question: Concerns about homebuilder outlook affecting volumes - Management remains confident in growth, expecting market penetration to increase despite broader economic concerns [59] Question: Impact of tariffs on PVC trade flows - Management is monitoring potential impacts of tariffs on trade patterns and will adapt as necessary [62] Question: Volume and price changes for the year - Year-over-year volume improvements were 6% for PEM and 8% for HIP, with price declines of 12% for PEM and 6% for HIP [81][84] Question: Free cash flow outlook for 2025 - Management expects stronger free cash flow generation in 2025 due to continued strength in the HIP business [90] Question: Recent demand experience in major product lines - Demand for polyethylene remains strong, with price initiatives reflecting good market conditions [118] Question: Expectations for EBITDA margins in 2025 - Management views the 20% to 22% EBITDA margin guidance as conservative, with potential for improvement if housing starts increase [132]