Huawei Posts Lowest Ever Annual Net Profit with 69% Decline

BEIJING, March 31 (TMTPOST)— Huawei Technologies Co. posted its lowest ever yearly profit in 2022, highlighting the severer environment both at the home and abroad.

Source: Visual China

At an annual report press on Friday, Huawei released its yearly net income of RMB35.6 billion (US$5.2 billion), falling 68.7% from 2021. This is the biggest annual decline in more than a decade. Its net profit margin of 5.5% dropped 12.3 percentage points from the previous year. The operating cash flow dropped 70.2% year-over-year (YoY) to RMB17.8 billion, and the net cash balance down 26.9% to RMB176.3 billion. Net income in 2021 rose 75.9% YoY to RMB113.7 billion, driven by a big one-off gain from sales of the smartphone brand Honor. But the revenue edged higher to RMB642.3 billion, compared with RMB636.8 billion Huawei generated in 2021 with a 28.5% YoY decrease, the first annual revenue decline since inception. The revenue remained well below the company’s record of $122 billion in 2019, when it at a point ranked as the No.1 mobile vendor in the world.

The net income of 2022 hit a historical low and the decrease in profit was mainly due to the decline in overall operating profit and the increase in research and development (R&D) investment, Meng Wanzhou, the Deputy Chairwoman and Chief Financial Officer (CFO), said at the press. The telecom giant’s operation is under great pressure, which comes from the shrinking revenue of the terminal, the commodity price surge across the globe, and our increasing R&D input for business continuity, according to Meng, who will become the next Rotating Chairperson from April 1.

The overall operating performance is in line with our expectations and the finance remained stable, Meng commented. She added that most of Huawei’s business plans can be funded by the current the net cash balance. “I believe that we will not change our business strategy of continuously attracting top talents around the world even such pressure persists for a long time,” Meng stated. “We look forward to seeing more like-minded leading figures and scientists join Huawei to climb the Mount Everest with us, and overcome difficulties with us.”

During the press, Huawei first disclosed revenues by different businesses. Huawei said the digital power business brought in RMB50.8 billion in 2022, and has helped customers generated 695.1 billion kilowatt-hours of green power and reduced carbon dioxide emissions by 340 million tons by the end of the year, which is equivalent to planting 470 million trees. The cloud business maintained rapid growth and raked in RMB45.3 billion for the year. The Intelligent Automotive Solution (IAS) business generated RMB2.1 billion and launched more than 30 intelligent auto parts, significantly improving competitiveness and user experience. The Information and Communication Technologies (ICTs) infrastructure business delivered a steady growth with annual revenue of RMB354 billion. Huawei-built 5G networks offer the best experience in the top 10 representative 5G-enabled cities in the world, according to Ookla’s latest 5G City Benchmark Report.

2023 is crucial to Huawei’s survival and development, and for the company in 2023 and the next few years, the key strategic way is to create growth opportunities, improve development resilience, build differentiated advantages, win by quality, and ensure high-quality business continuity and product competitiveness, said Xu Zhijun, or Eric Xu, President of the Wireless Network Product Line and the Rotating Chairman ended March 31.

Revenue of the year 2022 is expected to be RMB636.9 billion (US$91.53 billion), roughly flat compared with the previous year’s RMB636.8 bilion, Eric Xu, Huawei’s Rotating Chairman, said in a letter to staff in late December. The digital energy and cloud saw rapid growth, the ICT infrastructure maintained steady increase, while the decline of terminal business slowed down, Xu commented performance of various businesses in the year.

As to the question about when Huawei will roll out the 5G mobile, Xu Zhijun replied that the smartphone business is the most affected by the U.S. sanctions. Huawei has been unable to offer 5G mobiles due to the U.S. export ban from 5G-capable chips. Xu said his company can make 5G phones if it obtains approval from the U.S. Department of Commerce.

Xu also reiterated that Huawei had made it clear that it does not build cars, but helps automakers to build good cars. Huawei will insist it at lease the coming five years, based on the relevant internal document issued by the founder Ren Zhengfei on Friday is valid for five years. In fact, Huawei will not make the car in the next decade, and it will not adjust its strategy in the automobile industry repeatedly, Xu said.

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