Huawei eyes record revenue this year on back of strongest first-half growth in five years

PUBLISHED : Monday, 25 July, 2016, 1:45pm
UPDATED : Monday, 25 July, 2016, 11:01pm

Huawei Technologies, the world’s largest telecommunications network equipment supplier, could be poised for record-high revenue this year after posting its strongest first-half sales growth in five years.

The Shenzhen-based company on Monday said revenue for the first six months of this year jumped 40 per cent to 245.5 billion yuan (HK$284.8 billion), up from 175.9 billion yuan in the same period last year, on the back of a steady increase in sales at its three main businesses.

That would mark the biggest year-on-year revenue growth for Huawei since the privately held company started reporting its first-half sales performance in 2011, and further extends its lead over global rival Ericsson.

Huawei posted a 30 per cent year-on-year sales growth in the first six months of last year, which was nearly double that of its 19 per cent per cent year-on-year revenue increase in the first half of 2014.

“We achieved steady growth across all three of our business groups [in the first half], thanks to a well-balanced global presence and an unwavering focus on our pipe strategy,” Huawei chief financial officer Sabrina Meng Wanzhou said.

According to the company, its pipe strategy refers to the build-out of a robust data pipeline, which is an extensive “information and communications technology infrastructure that supports the rapid and secure generation, storage, aggregation and transmission of massive amounts of data” used around the world.

Huawei in April predicted its total revenue this year would reach US$70 billion, compared with US$60.8 billion last year.

Meng, the daughter of Huawei founder Ren Zhengfei, said the company was confident that it “will maintain its current momentum, and round out the full year in a positive financial position”.

The company, however, reported that its operating margin in the first half of this year reached 12 per cent, down from 18 per cent a year earlier.

Huawei’s first-half revenue still was ahead of that recorded by Sweden’s Ericsson, its closest rival and once the world’s top telecommunications network equipment supplier.

Data from Bernstein showed that Nasdaq-listed Ericsson’s first-half revenue reached SEK106.3 billion, worth about US$12.3 billion, which included sales of networks and professional services. That was down from its SEK114.2 billion revenue in the first half of 2015.

On Ericsson’s first-half sales results, Bernstein senior analyst Pierre Ferragu said in a report: “Management stated that they expect the current sales trends and business mix to prevail into the second half of the year, so no recovery should be expected around the corner.”

It is a situation that puts Huawei, which operates in more than 170 countries and territories, at a continued strong advantage. Its three business segments comprise carrier and enterprise networks, as well as consumer devices.

Huawei in April forecast its consumer business, led by smartphones, would reach US$30 billion in sales this year, up from US$20 billion last year.