Huawei insists everything’s fine after revenue growth slows dramatically

Chinese telecoms vendor Huawei just about managed to grow its revenues in Q1 2020 in the face of mounting challenges.

Huawei’s quarterly announcements tend to be pretty minimal, since it’s not a public company and thus doesn’t have to publish any of its numbers if it doesn’t feel like it. All we got this time was CNY182.2 billion (~$27 billion) in revenue, which was an increase of 1.4% year-on-year, and a net profit margin of 7.3%. “Huawei’s business is continuing as usual and its overall business results in Q1 2020 are in line with expectations,” said the announcement.

Assuming these numbers are legit, independently audited, etc, it seems like a decent effort to keep growing after a quarter in which the coronavirus pandemic affected China first and most severely. On the other hand, Huawei managed to grow its revenues by 19% last year, so this represents a dramatic slowdown and points towards negative growth next quarter.

Because Huawei didn’t fancy even breaking down the numbers by business group, we don’t know which of business or consumer spend was more responsible for the slowdown at Huawei. The chances are the split was fairly even since the whole world has slowed down too. One silver lining for Huawei is that the US is too distracted by the crisis to impose more punishments on it. But considering the daily deterioration of relations between the US and China, it’s surely just a matter of time before they resume.

Huawei spent the rest of its announcement banging on about what a great job it’s doing with helping the world deal with the crisis. Since the outbreak, Huawei and its partners have rapidly launched many 5G- and AI-powered medical applications,” said the press release. “We are using our expertise in communications technologies to help fight the pandemic and save more lives… In addition, Huawei has been doing its best to get masks, test kits, and other protective supplies to the countries and organizations that need them.”

The earnings announcement signed off on a philosophical note. “A seed that survives the storm will sprout and then blossom,” it mused. “Even though it is impossible to know when the tides of this pandemic will turn, we at Huawei believe that this challenge will be overcome by standing together.” Fine sentiments but global geopolitical trends would suggest it’s a forlorn hope.