Huawei 2011 financials: 20 million smartphones sold yet profit down 53 percent


Huawei's annual earnings report is out and it's a mixed bag, since while turnover increased by 11.7 percent to 203.9 RMB ($32.3 billion), profits plummeted 53 percent to 11.6 billion RMB ($1.8 billion). Revenue from overseas sales (138.4 billion RMB) equated for over half the company's total income and it boasted of having sold 150 million consumer devices, including 20 million smartphones in the year. The company didn't provide reasons for the drop in profit, emphasizing that it's increased R&D spending by 34.2 percent to 23.7 billion RMB ($3.75 billion) and that in any event, it's got around $30 billion of assets that can shoulder the brunt of a bad year.

However, the company may not see a rosy 2012 either, after both America and Australia refused to give the company big infrastructure deals (Huawei's bread and butter) thanks to allegedly close relationships between the company and the Chinese government. It seems to be following a similar trajectory to rival ZTE, which also felt margins squeeze as it entered the global retail space and felt the heat when its political dealings were thrown in the spotlight.

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Huawei Reports FY11 Revenue of CNY 203.9 Billion, R&D Investment of CNY 23.7 Billion and Embarks on Business Transformation
Increases Investment in Innovation, Enterprise and Consumer Businesses

[Shenzhen, China, 23 April, 2012]: Huawei, a leading global information and communications technology (ICT) solutions provider, today released its audited full-year 2011 financial results, recording sales revenues of CNY 203.9 billion, an 11.7% growth over the previous year. Huawei also reported net profits of CNY 11.6 billion. These results were in line with Huawei's business revenue expectations.

Huawei's 2011 business performance was buoyed by impressive growth achieved by the Consumer and Enterprise business groups. Huawei recorded sales revenues of CNY 44.6 billion in the consumer business, an increase of 44.3% over 2010. In particular, the Consumer business group saw robust growth in the smart devices segment, shipping close to 150 million units last year. Huawei's Enterprise business group increased sales revenues by 57.1% year-on-year, generating CNY 9.2 billion in its first full year of operation as one of Huawei's core business groups.

Huawei continued to grow and consolidate its market presence globally in 2011, generating sales revenues of CNY 65.57 billion, up 5.5%, from the domestic market; and recording sales revenues of CNY 138.4 billion, an increase of 14.9%, from overseas markets.

"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," said Mr. Ken Hu, Rotating and Acting CEO, Huawei. "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 23.7 billion, a year-on-year increase of 34.2%. The significant commitment to innovation, which represents 11.6% of total annual sales revenues, is a core pillar of Huawei's business strategy, which sees the company positioning itself to leverage high-growth areas and industry growth fundamentals for continued success.

Looking ahead, Huawei 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 Huawei's promise of aligning operators, enterprises and consumers with the immense possibilities of a connected world.

Huawei's full-year results were independently audited by international accounting firm KPMG, and are outlined in the company's 2011 annual report. The report, which was made publicly available today, can be found at [].

CNY 6.2949 RMB =USD 1.00 (as of December 31, 2011; see page 6 of annual report)