Huawei, the Chinese mobile infrastructure and handset provider, saw its net profit plummet by 53% in 2011 to CNY (Chinese Yuan) 11.6bn (£1.1bn), according to its annual results released this week (23 April 2012).
No reason given for the fall in profit, but the company did increase spending on research and development by 34% in 2011. A stronger Chinese currency and thinner margins on smartphones may also be a contributory factor.
However, the company’s sales revenues rose by 11.7% in 2011 to CNY 203.9bn (£20bn) thanks to growth in the Consumer and Enterprise business groups. Huawei recorded sales revenues of CNY 44.6bn (£4.3bn) in the consumer business, an increase of 44.3% over 2010.
The Consumer business group saw robust growth in the smart devices segment, shipping close to 150 million units last year, including 20 million smartphones. Huawei’s Enterprise business group increased sales revenues by 57.1% year-on-year, generating CNY 9.2bn (£0.9bn) in its first full year of operation as one of Huawei’s core business groups. Huawei moved into second place behind Ericsson for network infrastructure sales in Q4 2011.
Huawei continued to grow and consolidate its market presence globally in 2011, generating sales revenues of CNY 65.5bn (£6.4bn), up 5.5%, from the domestic market; and recording sales revenues of CNY 138.4bn (£13.5bn), an increase of 14.9%, from overseas markets.
Ken Hu, Rotating and Acting CEO, Huawei, said: ‘In 2011, Huawei increased its investment in the enterprise and consumer business segments, and achieved all-around growth on the back of strong business momentum generated by the company’s successful transformation into a complete end-to-end ICT solutions provider.
‘We have made strategic investments, augmented our R&D capabilities and deployed resources globally, and implemented a future-oriented business architecture that puts Huawei in a confident position for sustained growth.’
Huawei boosted its investment in R&D to CNY 23.7bn (£2.3bn), a year-on-year increase of 34.2%, representing a commitment of 11.6% of total annual sales revenues.
Looking ahead, Huawei said it will harness its business focus and visionary corporate governance structure to realize the opportunities presented by ICT convergence. The company will also increase its investment in its cloud-pipe-device strategy to deliver on its promise of aligning operators, enterprises and consumers with the immense possibilities of a connected world.