Huawei’s profit soars despite battle with US Chinese telecom group posts 25% rise in net income on strong domestic and overseas sales © Reuters Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Share Save Save to myFT Topic Tracker Yuan Yang in Shenzhen MARCH 29, 2019 Print this page76 Huawei Technologies on Friday reported record profits and strong overseas growth for 2018 despite mounting pressure from the US for countries to ditch the Chinese telecoms company from their 5G networks. The Shenzhen-based group said its calendar-year net profit rose 25 per cent last year compared with 2017 to Rmb59.3bn ($8.8bn). Revenues rose 19.5 per cent to a record Rmb721.2bn, buoyed by a 45 per cent jump in sales for its smartphone unit. The company said while 52 per cent of its sales are still in China, revenue grew more than 20 per cent in the Americas as well as in Europe, the Middle East and Africa.
Asia-Pacific growth was 15 per cent. Huawei, which is privately owned, is under rising international pressure from the US and other countries concerned that its equipment could be used for spying by the Chinese government. Meng Wanzhou, Huawei’s chief financial officer and the daughter of the company’s founder, was arrested in Canada on a US extradition request that she face charges related to breaching Iran sanctions. “The US government has a loser’s attitude,” said rotating chairman Guo Ping. “They want to smear Huawei because they can’t compete with us.” He added that “the US has abandoned all table manners”. Responding to the mounting international criticism of the company, Mr Guo said that external pressure had helped Huawei improve. “[The US’s] actions have troubled us to some extent,” said Mr Guo.
“We have more communication work to be done. You can see some of the results of this. Countries have made their own decisions based on their own interests, not the interests of the US.” The company forecasts double-digit growth in revenues this year. © Reuters Huawei is the world’s biggest telecoms equipment manufacturer, with 28 per cent of the market, according to research company Dell’Oro, far ahead of its European competitors Ericsson and Nokia. But despite scoring the most 5G contracts in the world, with more than 30, sales for the carrier division in 2018 were slightly down 1.3 per cent at Rmb294bn. Mr Guo ascribed the decrease to operators’ investment cycles, and said it was within the company’s expectations.
“The carrier business has been slowing, but as the roll-out of 5G begins in earnest this year, growth should accelerate,” said Dan Wang, a technology analyst at Gavekal Dragonomics, a consultancy. “There’s a risk that pressure from the US can hurt Huawei’s business,” Mr Wang added. “Huawei will have a hard time if the US decides to limit the export of US technologies to the company.” Recommended ARM Holdings PLC Arm warns delaying 5G in Europe would hit GDP Last year, Huawei overtook Apple for the first time to become the world’s second-biggest smartphone vendor. The company was one of the first to launch a foldable smartphone this year. While its handsets sell for 30-50 per cent of Apple’s prices, analysts say it has been quick to innovate.
“Huawei smartphones are differentiated from other Chinese phones, they have their own chips after all, and stronger design,” said Fei Mu, analyst at market research company Forrester. “They also found a good niche targeting business people who can pay higher prices.” On Thursday, a British watchdog harshly criticised Huawei for failing to improve on cyber security, saying that it could only give “limited assurance” that risks to the UK’s national security could be sufficiently mitigated. Mr Guo responded: “The report has shown we have no backdoors. In fact we have opened the front door and provided our source code for testing.” He was referring to allegations Huawei’s technology could contain hidden access points that would allow the Chinese government to view and control data. With additional reporting by Nian Liu in Beijing
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