Huawei posts strongest revenue growth in 7 years

Tuesday, 5 April 2016 00:14 - - {{hitsCtrl.values.hits}}

HONG KONG/BEIJING (Reuters): China’s Huawei Technologies Co Ltd on Friday posted its biggest annual revenue growth since 2008, boosted by China’s adoption of fourth-generation (4G) mobile technology and strong sales of smartphone worldwide.

Huawei, one of the world’s largest telecom equipment makers, said total revenue rose 37% to 395 billion yuan ($ 61.10 billion) in 2015, slightly above its forecast of 390 billion yuan.

The Shenzhen-based company said it expects revenue to increase to $ 75 billion this year, which implies the growth rate will slow to 23%, according to Reuters calculations.

The company had in early 2014 targeted overall revenue of $ 70 billion by 2018, which translated to growth of roughly 10%.

Huawei forecast 2016 revenue of $ 30 billion for the consumer devices business, which was its fastest growing division and second-biggest revenue generator last year.

The forecast implies revenue growth in the business will slow down to about 51% in 2016 from about 73% in 2015, when the company outperformed domestic peers Lenovo Group and Xiaomi Inc.

Huawei became the first Chinese handset vendor to ship more than 100 million smartphones in a year in 2015 when a 44% jump in its shipments defied a market slowdown.

That helped the company’s net profit rise 32% to 36.9 billion yuan last year, from 27.9 billion yuan a year earlier.

Huawei’s growth is “a direct result of strategic focus and heavy investment in our core businesses,” Guo Ping, one of the company’s CEOs who holds the post on a rotating basis, wrote in a statement.

Revenue in Huawei’s carrier business, which competes with Sweden’s Ericsson for the top spot globally for telecommunication equipment, increased 21.4% in 2015 on strong demand for 4G telecommunication equipment.

The carrier business is Huawei’s biggest, accounting for about 59% of 2015 revenue.

The company’s smallest business is the enterprise division, which builds private networks for companies and organisations. Revenue in the business rose 43.8% last year.

Huawei said it spent 15% of its revenue last year on research and development, above its guidance of 10%. Operating margins dipped to 11.6% from 11.9%.

Total liabilities stood at 253 billion yuan, versus total assets of 372 billion yuan, the company said.

Huawei’s upcoming flagship phone to sport Leica camera

AFP: Controversial Chinese tech company Huawei’s next smartphone will sport a camera from premium German manufacturer Leica, it said Friday as it announced a jump in profits driven by its consumer division.

The smartphone maker in late February announced the partnership with Leica, one of the most respected names in the camera industry, in a bid to improve its premium smartphone selection.

“We are going to launch our P9 flagship phone very soon and this is a product that we worked with Leica to produce,” Huawei deputy chairman Guo Ping said at a press conference held at their Shenzhen headquarters, where the company’s annual results were announced.

“We need to work with the strongest partners in this area to provide the best product,” Guo said, adding that the there is “fierce competition” in the consumer market.

Huawei saw net profit rise 33% year-on-year for 2015, reaching 36.9 billion yuan ($ 5.7 billion), and said revenue for the year was 395 billion yuan, a year-on-year increase of 37%.

Its consumer business grew 72.9% to 129.1 billion yuan, after it shipped 108 million smartphones for the year and attributed its growth to the growing influence of the Huawei brand.

The firm is one of the largest providers of network infrastructure globally, but its consumer products are less well-known outside of China.

Since its founding in 1987, Huawei has surged to become one of the world’s top manufacturers of network equipment, operating in 170 countries and expanding rapidly into consumer electronics such as smartphones.

But the company has been isolated from government contracts in some countries due to security fears.

Australia last year barred Huawei from bidding to build its national broadband network, saying security agencies warned the Chinese company posed risks.

US officials also view Huawei as a security threat due to perceived close links to the Chinese government, which the company denies.

Huawei has taken a leading position in the smartphone market in China ahead of Samsung, but its US offerings have been limited until its recent agreement to produce a Nexus phone for Google.

Huawei was tapped in late 2015 to produce the Nexus 6P, one of two handsets by Google to showcase its Android mobile operating system.

With this partnership, the Chinese tech giant is gaining new prominence that could help its efforts to win broader global consumer appeal.

At a time when Chinese firms are struggling to break the dominance of Apple and Samsung on the high end of the smartphone market, the partnership is a milestone for Huawei.

It is due to release its newest iteration of its flagship phone in the shape of the yet-to-be-announced Huawei P9.

Huawei is not listed on any stock exchange but it releases financial information in the interest of transparency.

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