Huawei, the Chinese mobile infrastructure and devices group, announced today (21 January 2013) that it expects its 2012 global sales revenues to reach CNY 220.2bn (£22.2bn), an 8% year-on-year increase. It predicts a net profit of CNY 15.4bn (£1.5bn), a 33% increase from the previous year.
The net profit result showed a strong turnaround compared with 2011, when it plummeted by 53% to CNY 11.6bn (£1.1bn), according to Huawei’s annual results released on 23 April 2012. Sales revenue rose by 11.7% in 2011 to CNY 203.9bn (£20bn) thanks to growth in the Consumer and Enterprise business groups.
Huawei’s three business groups continued their steady growth and achieved performance in line with expectations, the company said. Huawei’s Carrier Network business group, a traditionally strong business division, achieved sales revenues of CNY 160.3bn (£16.2bn).
Huawei’s Consumer business group recorded sales revenue of CNY 48.4bn (£4.8bn), with sales continuing to grow in developed markets including Europe and Japan. Huawei’s Enterprise business group further developed its portfolio and won contracts, generating sales revenue of CNY 11.5bn (£1.1bn).
66% of Huawei’s overall revenue came from outside China. Among the overseas revenue, the Asia-Pacific region saw revenue of CNY 37.4bn (£3.7bn), while Europe, Middle East and Africa recorded CNY 77.4bn (£7.8bn) and the Americas contributed CNY 31.8bn (£3.2bn). The USA remains a problematic market for Huawei due to the continued hostility from the government to the deployment of Chinese technology in national communications infrastructure. The domestic market China recorded revenues of CNY 73.6bn (£7.4bn).
Cathy Meng, Huawei chief financial officer, said the company achieved effective growth in 2012 by focusing on customers, streamlining management and improving efficiency. Meng is positive about the industry’s future growth prospects.
She explained that Huawei’s success in 2012 can be attributed to maximizing value for the customer. ‘We insist on strictly controlling G&A expenses and allocate more resources to bolster the front line and ensure continuous improvements on customer delivery and service quality. In addition, Huawei continued its ongoing management transformation, raising combined operating efficiency with an integrated financial services program.’
Meng concluded with a projection that Huawei expects its overall revenue to grow 10%-12% in 2013.
Continuous innovation focusing on customer needs is also an important driving force for Huawei’s growth. The company has cumulatively invested CNY 120bn (£12.1bn) in R&D over the past 10 years, including a CNY 29.9bn (£3bn) investment in 2012, accounting for more than 13% of the year’s revenue.
Huawei has strategically focused on developing sophisticated communications network infrastructure, or ‘pipe’. Huawei has invested in and developed its Carrier Network, Enterprise and Consumer businesses in order to provide faster, broader and smarter information services to its customers, while addressing the challenges and opportunities in the era of big data. About 70% of Huawei’s revenue was generated from serving leading telecommunications operators, including 45 of the world’s top 50.
The convergence of mobile internet, smartphones and the digital and physical world is likely to generate hundreds of times more data in the coming years, which presents tremendous challenges as well as unprecedented opportunities for development of the ICT industry. Huawei believes that pipes with large bandwidth that can transmit and process massive data flow are the key to addressing these challenges and also Huawei’s key growth driver in the future.
Further details of the 2012 results audited by KPMG will be outlined in the company’s annual report, which will be released in April 2013.