Revenues tumble but Huawei builds up profitability in 2021

Chinese comms tech provider feels the strain from tech bans and Covid, but returns solid operations and looks for future investments as it releases annual report

Despite a number of major economies banning its technology from their communications infrastructures, Chinese tech giant Huawei maintained solid operations throughout the 2021 fiscal year, with a significant rise in profits despite a near 29% fall in revenues.

According to Huawei’s 2021 Annual Report, the firm’s overall performance was in line with forecasts. Its carrier business was described as remaining stable, its enterprise business experienced steady growth and its consumer business was said to have quickly expanded into new domains.

Also, the company embarked on a fast track of ecosystem development. According to the company’s chief financial operator Meng Wanzhou, despite its revenue decline in 2021, Huawei’s ability to make a profit and generate cash flows was increasing and the company was now more capable of dealing with uncertainty.

In all, Huawei generated CNY636.8bn (US$99.9bn) in revenue in 2021, and CNY113.7bn ($17.8bn) in net profits, an increase of 75.9% year on year. The company’s R&D expenditure reached CNY142.7bn ($22.4bn) in 2021, representing 22.4% of its total revenue, and bringing its total R&D expenditure over the past 10 years to over CNY845bn ($132.5bn).

Moving forward, the company also plans to continuously increase investment in R&D. Thanks to the enhanced profitability of its major businesses, its cash flow from operating activities increased dramatically in 2021, amounting to CNY59.7bn ($9.4bn), while its liability ratio dropped to 57.8%. The result, said the firm, was that its overall financial structure had become more resilient and flexible.

As it helped carriers around the world to deploy 5G networks in 2021, Huawei’s carrier business generated CNY281.5bn ($44.2bn) in revenue. The company claimed that third-party test results have found that 5G networks built by Huawei for customers in 13 countries, including Switzerland, Germany, Finland, the Netherlands, South Korea, and Saudi Arabia, provide the best user experience.

It added that by working with carriers and partners, it had signed more than 3,000 commercial contracts for industrial 5G applications. These kinds of 5G applications were seeing large-scale commercial use in sectors such as manufacturing, mines, iron and steel plants, ports and hospitals, it said.

Huawei said its enterprise business benefited from continuing digital transformation trends, growing rapidly and generating CNY102.4bn ($16.1bn) in revenue during 2021. In the past year, Huawei launched 11 scenario-based solutions for key sectors such as government, transportation, finance, energy and manufacturing.

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The company also established multiple dedicated teams, including a coal mine team, a smart road team, and a customs and port team, to combine resources to serve the needs of its customers more efficiently.

The annual report also noted that more than 700 cities and 267 Fortune Global 500 companies had chosen Huawei as their digital transformation partner and the company was now working with more than 6,000 service and operation partners around the world.

During the past year, Huawei also focused on building out its openEuler, MindSpore and HarmonyOS ecosystems based on the principles of open collaboration and shared growth. More than eight million developers are currently using Huawei’s open platforms, open source software and development tools to explore new business scenarios and business models.

Going forward, Huawei said it would advance its journey of digitsation, intelligent transformation and low carbon. “Relying on talent, scientific research and an innovative spirit, we will continuously increase investment to reshape our paradigms for fundamental theories, architecture and software, and build our long-term competitiveness,” said Huawei rotating chairman Guo Ping.

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