Huawei revealed a deepening decline in earnings during H1, as trade restrictions continued to batter its consumer division and a delay in a domestic 5G network contract led to a double-digit decline in revenue in its key carrier division.
Revenue fell 29.4 per cent year-on-year to CNY320.4 billion ($49.5 billion). Its net profit margin rose to 9.8 per cent from 9.2 per cent in H1 2020, its highest since US sanctions were imposed in March 2019.
In a statement, rotating chairman Eric Xu (pictured) noted the results were in line with forecasts: “Despite a decline in revenue from our consumer business caused by external factors, we are confident our carrier and enterprise businesses will continue to grow steadily.”
“Our aim is to survive, and to do so sustainably.”
Digital push
Xu acknowledged Huawei faced challenging times, but stated it continues “to believe deeply in the power of digital technology to provide fresh solutions to the problems the world is facing right now”.
A Huawei representative told Mobile World Live it has no plans to cut staff or scale back overseas markets, explaining the company plans to “continue our current strategy, and we are on target to hit our annual business target”.
The vendor targets growth from its cloud business, an expanding focus on software [1] including HarmonyOS, and intelligent vehicles.
It stated more than 50 million users had switched to HarmonyOS 2 [2] since its launch in June.
During H1, Huawei started offering vehicles at its Chinese experience stores, targeting sales of 300,000 cars in 2022 as it turns to the sector [3] to bridge the gap to a declining smartphone business.
Business groups
Carrier Network Business Group (CNBG) revenue fell 14.2 per cent to CNY136.9 billion, attributed to China Mobile delaying its 700MHz 5G tender [4] to mid-July. Huawei won 60 per cent of the contract and without the delay would have grown revenue at the division.
The unit’s non-domestic revenue increased, “a very positive sign and we’re confident of achieving steady growth for the full year”, the representative said.
Consumer Business Group sales fell 47 per cent to CNY135.7 billion due in large part to the loss of its Honor device unit [5].
Enterprise business revenue grew 18.2 per cent to CNY42.9 billion on increased uptake of digital services and growth in its cloud business.
Over the past three years, the company invested nearly 15 per cent of annual revenue on R&D, with the amount to rise without any major changes to its focus, the company stated.
[1] https://www.mobileworldlive.com/devices/news-devices/huawei-founder-targets-software
[2] https://www.mobileworldlive.com/featured-content/home-banner/huawei-harmonyos-2-0
[3] https://www.mobileworldlive.com/featured-content/home-banner/huawei-targets-auto-industry-role
[4] https://www.mobileworldlive.com/featured-content/home-banner/nokia-scores-in-china-as-ericsson-stumbles
[5] https://www.mobileworldlive.com/devices/news-devices/huawei-shakes-on-honor-sale
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