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HUAWEI profits grew 33 percent last year

HUAWEI has reported at 33 percent rise in profits for 2014, led by a 32.6 percent growth in consumer hardware and a 16.4 rise in communication hardware revenue.

Published onMarch 31, 2015

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Huawei has announced its net profit for 2014, which saw a 33 percent rise over the previous year. As well as an increase in smartphone sales, HUAWEI has also seen a rise in demand for its telecommunications equipment, as the global 4G rollout continues.

Net profit rose to 27.9 billion yuan (USD 4.5 billion) last year on the back of a 21 percent increase in global revenue, which reached 288.2 billion yuan (USD 36.8 billion). HUAWEI is estimating that its global revenue will grow by another 20 percent this year as well. However, HUAWEI saw its operating margins fall to 11.9 percent in 2014 compared with 12.2 percent in 2013.

Looking more specifically at hardware, HUAWEI’s consumer device division, aka smartphones, saw its biggest leap in revenue last year. Revenues rose 32.6 percent, ahead of the enterprise division which grew 27.3 percent. HUAWEI is hovering around the top five spot for global smartphone shipments, depending on who you ask, with the bulk of its shipments heading to Asia and emerging markets. Foreign exchange rates had a particularly strong influence on earnings last year, due to an increase in foreign sales. We have seen strong 2014 profits for rival Chinese manufacturers too and HUAWEI seems to be thriving in this heavily competitive market.

Huawei’s carrier hardware business also saw a 16.4 percent growth in revenue last year. For comparison, consumer hardware accounts for 26% of the company’s overall revenue, while telecommunication equipment made up 67 percent last year.

HUAWEI still remains locked out of several major foreign markets, following fears that close ties to the Chinese government, which finances 22 percent of the company’s debt, makes the company a security threat. Both the US and Australia are keen to prevent HUAWEI from being involved in communications. Speaking of debt, HUAWEI announced that the company’s total liabilities amount to 209.8 billion yuan, while it holds assets of 309.8 billion yuan.

HUAWEI is targeting roughly 10 percent year on year growth to reach its revenue target by 2018, and is also looking to new technologies, such as cloud computing and 5G mobile communications for future areas of revenue.

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