Huawei projects solid sales this year, despite lingering security fears

Shenzhen-based firm's total revenue may have surpassed Swedish rival Ericsson's in 2012

PUBLISHED : Monday, 21 January, 2013, 3:52pm
UPDATED : Tuesday, 22 January, 2013, 2:37am

Chinese telecommunications equipment maker Huawei Technologies expects to bolster its global revenue growth this year after posting sales that may have outpaced those of industry leader Ericsson over the past 12 months.

Huawei chief financial officer Cathy Meng Wanzhou yesterday announced strong gains for last year, defying the nasty public relations and marketing blowback from a United States congressional report that accused the company of being a security risk.

At a news conference in Beijing, Meng reported an unaudited 33 per cent increase in net profit last year to 15.4 billion yuan (HK$19.2 billion) from 11.6 billion yuan in 2011.

Privately-held Huawei, China's largest telecommunications equipment manufacturer, attributed that improvement to steady growth in global network equipment sales to carriers, high demand for smartphones and other mobile devices in the consumer segment and new contracts won by its enterprise business group. According to Bernstein Research, Huawei had a leading 28 per cent share of the mainland's wireless network equipment market last year.

The Shenzhen-based company's global sales rose 8 per cent to 220.2 billion yuan, up from 203.9 billion yuan the previous year. The 2012 results audited by KPMG will be published in April.

The total sales generated last year by Huawei may prove to be greater than those of Ericsson, the world's largest supplier of telecommunications equipment, in the same period. The Swedish company's 2012 revenue is expected to reach 226.9 billion krona (218.03 billion yuan), according to a Bloomberg average of 17 analysts' estimates.

Meng, who is the daughter of Huawei founder and chief executive Ren Zhengfei, projected the firm's global sales this year would grow from 10 per cent to 12 per cent. About 66 per cent of sales last year were generated outside its home mainland market.

Increased innovation would drive Huawei's growth, according to Meng. She pointed out that the company, which has spent 120 billion yuan in research and development over the past 10 years, has no plans to go public but kept an "open mind" about that process.

The positive outlook has taken some of the sting from the investigation by the Intelligence Committee of the US House of Representatives, which announced in October that the company and mainland rival ZTE were security threats and should be barred from supplying US carriers with telecommunications network gear. Meng said such protectionist measures stifled competition and put US consumers at a disadvantage.