Huawei 2012 results: $2.5 billion profit, smartphone penetration 'still way too low'

Huawei has announced some pretty respectable numbers for the year just passed, with the company taking $35.4 billion (CNY 220.2 billion) in revenue and turning that into a $2.48 billion (CNY 15.4 billion) profit -- both figures show an improvement over their 2011 counterparts. CFO Cathy Meng, daughter of Huawei's founder, said that despite the money coming in, "smartphone penetration is still way too low and there is a lot of room for growth." Meng also brought up the ongoing trust issues with the US, which she doesn't expect to hamper growth. Huawei is certainly maturing its international business regardless -- 66 percent of overall revenue came from other regions. All we know is that Huawei's becoming increasingly visible at international trade shows like CES, and it will undoubtedly have more to share at the upcoming MWC, where we can only hope to hear more about that mouth-watering eight-core chip.

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Huawei CFO Announces 2012 Financial Results
Achieves Effective Growth, Says ICT Sector Opportunity Is Growing

[Beijing, China, January 21, 2013]: Huawei, a leading global information and communications technology (ICT) solutions provider, today released its 2012 financial performance results.

Cathy Meng, Huawei Chief Financial Officer, said the company achieved effective growth in 2012 by focusing on customers, streamlining management and improving efficiency. Ms. Meng is positive about the industry's future growth prospects.

Huawei expects its 2012 global sales revenues to reach CNY 220.2 billion, an 8% year-on-year increase, with a net profit of CNY 15.4 billion, a 33% increase from the previous year. The earnings disclosure today is part of Huawei's ongoing commitment as a private employee-owned company to be more open and transparent with stakeholders. The 2012 results audited by KPMG will be outlined in the company's annual report, which will be released in April.

Ms. Meng 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," said Ms. Meng. "In addition, Huawei continued its ongoing management transformation, raising combined operating efficiency with an integrated financial services program."

Continuous innovation focusing on customer needs is also an important driving force for Huawei's growth. The company has cumulatively invested CNY 120 billion in R&D over the past 10 years, including a CNY 29.9 billion 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.

One of the key factors for Huawei's success is that the individual interests of Huawei employees are combined with the company's sustainable growth – meaning everyone works hard to ensure Huawei's long-term development. Huawei's management team highly values integrity and self-discipline. The personal income of each member of the management team, from board members to middle-level managers, is limited to their salary, incentive bonus and stock dividends provided by the company, with policies to ensure that no one in the company abuses their power for self-serving purposes.

Huawei's three business groups continued their steady growth and achieved performance in line with expectations. Huawei's Carrier Network business group, a traditionally strong business group, continued to be a leader in the industry, with sales revenues of CNY 160.3 billion. Huawei's Consumer business group recorded robust sales revenue of CNY 48.4 billion, 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 11.5 billion.

66% of Huawei's overall revenue came from outside China. Among the overseas revenue, the Asia-Pacific region saw revenue of CNY 37.4 billion, while Europe, Middle East and Africa recorded CNY 77.4 billion and the Americas contributed CNY 31.8 billion. The domestic market China recorded CNY 73.6 billion.

The convergence of mobile internet, smartphones, 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.

Ms. Meng concluded with a projection that Huawei expects its overall revenue to grow 10-12% in 2013.