Huawei CFO defends 2014 earnings, as early figures show slowdown in profit growth

Huawei CFO Meng Wanzhou defended the company's 2014 earnings after preliminary figures for the year showed that operating profit growth slowed relative to 2013.

At a news conference in Beijing to discuss the company's results, Meng said that it was not appropriate to compare 2014 operating profit with 2013, and that the Chinese vendor's focus on growth and profitability in 2014 paid off in the form of a stable profit margin of around 12 per cent, the Wall Street Journal reported.

A spokesman later explained to the Journal that 2013 had been an exceptional year, suggesting that a direct comparison between Huawei's earnings in each year is not as revealing as if the figures were like for like.

Huawei yesterday revealed preliminary figures for 2014 that point to an operating profit for the year in the range of CNY33.9 billion (€4.6 billion/$5.4 billion) to CNY34.3 billion. While the figures are still up on 2013, the Journal noted the rate of annual growth slowed. Based on the preliminary figures, Huawei's operating profit grew between 16.4 per cent and 17.8 per cent in 2014. In 2013, the figure increased 41 per cent year-on-year.

The Chinese vendor said all of its business units recorded strong performances through 2014. Revenue at the Carrier Network business increased 15 per cent year-on-year, while the company's Enterprise business grew sales 27 per cent.

Huawei's mobile device division--its Consumer Business--generated the highest annual revenue rise. Sales at the unit grew 32 per cent year-on-year, which the company said was due to higher sales of mid-range and high-end handsets amid a rapidly growing global smartphone market.

The Chinese vendor also revealed it invested between CNY39.5 billion and CNY40.5 billion in research and development in 2014, a rise of 28 per cent compared to 2013.

Huawei has established itself as a key player in the development of so-called 5G mobile technology, and in November detailed plans to invest £5 million (€6.4 million/$7.5 million) in the UK-based University of Surrey's 5G Innovation Centre as part of a broader global investment in the technology over the next three years.

The company in October revealed plans to increase its procurement spending in Europe from an estimated $3.7 billion in 2014 to around $4.08 billion in 2015.

For more:
- see Huawei's earnings announcement
- view this Wall Street Journal article

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