Huawei posts small revenue drop in first 9 months without revealing net profit

Huawei Technologies Co said its revenue from January to September dropped 2 per cent from the same period last year
The company, which remains private, did not disclose the net profit of its overall business, unlike in previous years

Huawei

Iris Dengin Shenzhen

Published: 4:07pm, 27 Oct 2022

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Huawei Technologies Co, the Chinese telecoms equipment giant struggling under US trade sanctions, reported a slight revenue decline year on year for the first nine months of 2022, but refrained from revealing its bottom line for the first time in nearly two decades.

The Shenzhen-based company on Thursday said its revenue from January to September dropped 2 per cent from the same period last year to 445.8 billion yuan (US$61.8 billion), narrowing from the 5.9 per cent revenue decline in the first half.

The company, which remains private, is not under any obligation to disclose its financial data, although it has published its revenue and net profit margin numbers for years.

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“The decline in our device business continued to slow down, and our ICT infrastructure business maintained steady growth,” Eric Xu, Huawei’s current rotating chairman, said in a statement, adding that the performance was in line with expectations.

“Going forward, we will keep bringing in top-notch talent and investing in R&D to take the competitiveness of our products to a new level.”

Huawei said during the period, it achieved a profit margin of 6.1 per cent for its “main business” – which includes earnings from selling products and services on an ongoing basis, but excludes one-time gains from the sales of businesses or subsidiaries.

The company had a net profit margin of 10.2 per cent in the same period in 2021, and 5 per cent in the first half of this year, according to financial data released previously.

The latest financial results come as Huawei struggles to diversify its revenue streams after US sanctions curbed its access to advanced chips, all but killing its once-lucrative smartphone business.

Since 2019, Huawei has found itself at the centre of a US-China trade war, superseded by a full-blown tech war. Washington put Huawei on the country’s Entity List in May 2019 over national security concerns, barring the telecoms giant from doing business with US firms without a licence.

The Huawei flagship store in Shenzhen, in China’s southern Guangdong province. Photo: AFP

The company faces further challenges as the US Federal Communications Commission is set to formally ban approvals of new equipment in US telecommunications networks from Huawei and its Chinese rival ZTE Corp.

The move would tighten restrictions on Huawei, which had received more approvals for more than 3,000 applications since 2018, the commission said last year.

Huawei, which briefly overtook Apple and Samsung Electronics in global smartphone sales in 2020, saw shipments plunge by 82 per cent in 2021, according to data by market research firm Omdia.

Despite the fall, Huawei has attempted to stay relevant in the high-end smartphone market with the release of its new flagship Mate 50-series handsets in September.

Meanwhile the company in May set up five new integrated teams, also known as legions, to focus on specific industries that include digital finance, energy, machine vision, manufacturing digitalisation and public services, adding to the existing teams established by Huawei since starting the initiative last October.

While looking for new lifelines in the aftermath of US sanctions, Huawei founder Ren Zhengfei sounded a warning to his employees about what he saw as a troubled global economy, urging them to focus on profitability to survive, according to a leaked internal memo in August.

Hong Kong- and Shenzhen-listed ZTE on Wednesday reported a 10.4 per cent increase in revenue to 92.6 billion yuan for the first nine months of this year. Its net profit grew 16.5 per cent to 6.8 billion yuan during the period.

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