Huawei Technologies 2016 Net Profit Rises 0.4% to CNY37.1 Billion
March 30 2017 - 11:29PM
Dow Jones News
By Dan Strumpf
SHENZHEN, China--Huawei Technologies Co. said its profit growth
slowed last year as margins fell and it invested more money in its
consumer business.
The Chinese telecommunications company is the world's
third-largest smartphone maker by sales after Samsung Electronics
Co. and Apple Inc. It also is a major producer of wireless
equipment, competing with Ericsson and Nokia Corp.
Despite its large footprint globally, Huawei has only a small
presence in the U.S., where its networking equipment is effectively
locked out due to concerns that the equipment could be used by
Beijing to spy on Americans. The company has repeatedly denied the
accusations.
Huawei, founded by former Chinese army engineer Ren Zhengfei,
has still sought a foothold in the U.S. It has been stepping up
efforts to sell its phones in the country, and this year launched
its high-end Mate 9 smartphone there for the first time.
But cracking the American market is a challenge for Huawei
because it lacks partnerships with major carriers, which distribute
the vast majority of phones in the U.S. The Americas region
accounted for 8% of revenue last year, Huawei said Friday, while
China accounted for 45% and Europe, the Middle East and Africa made
up nearly a third.
The company said Friday its full-year net profit edged up 0.4%
to 37.1 billion yuan, or about $5.39 billion, from 36.9 billion
yuan in 2015. Revenue jumped 32% to 521.6 billion yuan, as all
three of its major business lines saw growth.
Revenue at Huawei's consumer business segment, which includes
its smartphone business, rose 44% to 179.8 billion yuan, accounting
for more than a third of all revenue.
The company shipped more than 139 million smartphones last
year.
"In 2016, Huawei maintained its strategic focus and achieved
solid growth," said Eric Xu, Huawei's current CEO.
A higher share of profits from its consumer business group and
increased investment in that area led to lower overall margins last
year, Huawei said. Its profit margin fell to 7.1% from 9.3% in
2015. The company says it doesn't pursue high profitability.
Huawei's biggest revenue generator remained its
networking-equipment business, where revenue rose 24%. Revenue in
its enterprise business division, which supplies internet
infrastructure such as data centers, rose 47%.
Write to Dan Strumpf at daniel.strumpf@wsj.com
(END) Dow Jones Newswires
March 30, 2017 23:14 ET (03:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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