Chinese smartphone maker Xiaomi reported a drop in revenue in the first quarter as restrictions and lockdowns against Covid-19 impacted demand in China, while headwinds in the economy, including Russia’s invasion of Ukraine, pushed up costs.

The company’s revenue for the quarter ended March 31 fell to 73.35 billion yuan ($10.85 billion), from 76.88 billion a year earlier. The figure fell short of the 74.3 billion expected by analysts, based on data compiled by Refinitiv.

“In the first quarter, the entire industry faced challenges, first with component shortages, then the resurgence of Covid-19 and also an impact on the macroeconomic environment,” Xiaomi President Wang Xiang said on Thursday (19) .

“These challenges have dealt a heavy blow to our business.”

He noted that the Covid-19 outbreaks in Hong Kong and Shanghai have disrupted exports, and that the lockdown in Shanghai and the conflict in Ukraine are expected to put pressure on second-quarter revenues.

Smartphone shipments dropped 22.1% to 38.5 million units in the quarter, Xiaomi said.

The loss for the period amounted to 530.7 million yuan, down from a profit of 7.79 billion yuan on an annual basis.

Xiaomi, which generates most of its revenue from the sale of mobile devices, said smartphone revenue fell to 45.8 billion yuan in the quarter.