Huawei announces a major rebound in profitability

Chinese telecoms vendor Huawei has trickled out a couple of quarterly numbers that suggest it’s rebounding from the effect of US sanctions.

Huawei tends to offer the bare minimum of data in its quarterly updates, which is fair enough since it’s a private company but still makes meaningful analysis a bit tricky. We’re told that for the first three months of 2023 Huawei generated CNY456.6 billion in revenue, which represented a 2.4% annual increase.

The only other data point offered was a net profit margin of 16%, without any year-on-year comparison. However, we do have our report on Huawei’s quarterly numbers from a year ago, in which it spoke of a 6.1% margin. There’s also its last annual report, which offers more data. If you divide its net profit for the year by its revenue, that gives a margin figure of 5.5%. So it seems clear that Huawei has improved its profitability by a massive ten percentage points.

“The company’s performance is in line with forecast,” said Ken Hu, Huawei’s Rotating Chairman. “I’d like to thank our customers and partners for their ongoing trust and support. Moving forward, we will continue to increase our investment in R&D to make the most of our business portfolio and take the competitiveness of our products and services to new heights. As always, our goal is to create greater value for our customers, partners, and society.”

Last year’s profit was considered to be exceptionally low due to the many obstacles the US government had thrown in Huawei’s path. Conversely the previous year’s number was flattered by the forced disposal of some business units but was still only around 18%. So for Huawei to jump back to 16% is a significant achievement.

Perhaps some of it is attributable to an apparent improvement in its smartphone fortunes. Recent analyst reports point to Huawei gaining significant market share in in its domestic market and it seems to be doing a good job of navigating around the US restrictions to get hold of components. There are still questions about its ability to do so on the networking side but on the evidence of these admittedly sparse numbers, Huawei seems to be doing a good job of adapting to its circumstances.

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.