Huawei posts record 2014 profit, but operating profit growth slows

Huawei's 2014 operating profit came in at the high end of earnings guidance provided by the company mid-January, as the equipment vendor reported a record full-year net profit.

Fully audited earnings figures show the Chinese vendor grew operating profit from CNY29.1 billion (€4.3 billion/$4.6 billion) in 2013 to CNY34.2 billion in 2014, and increased net profit from CNY21 billion to CNY27.8 billion year-on-year.

In January, the company predicted operating income would fall into the range of CNY33.9 billion to CNY34.3 billion in preliminary results for the year.

While Huawei succeeded in growing operating income through 2014, the rate of growth relative to 2013 was down considerably: 17.4 per cent compared to the 41 per cent growth between 2012 and 2013.

Annual revenues hit CNY288 billion in 2014, compared to CNY239 million in 2013, and cash flow from operating activities almost doubled from CNY22.5 billion in 2013 to CNY41.7 billion in 2014.

Huawei stated that strong demand for mobile broadband networks fuelled a 16.4 per cent year-on-year increase in revenues at its Carrier Business Group, which hit CNY192.1 billion. The company's Enterprise business increased revenues 27.3 per cent year-on-year to CNY19.4 billion on the back of strong growth in fields including cloud data centres and agile networks. The Consumer Business Group grew revenues by 32.6 per cent to CNY75.1 billion, which the company said was due to growing consumer demand for smartphones--particularly in emerging markets.

Ken Hu, deputy chairman and rotating CEO, said rising revenues "can be attributed to a continuous focus on our pipe strategy" and that the increase in net profit "stems from streamlined management and improvements in overall efficiency."

Moving forward, the company will focus on broadband, Big Data and the Internet of Things, technologies Hu said "are becoming the engines that drive transformations in many industries."

Huawei CFO Meng Wanzhou said the 2014 figures show "Huawei maintained effective growth and achieved steady financial performance" with improvements in cash flow and profitability relative to 2013.

In a separate announcement, Huawei said that Hu's latest tenure as rotating CEO has ended, with deputy chairman Eric Xu again taking the hot seat for the next six months from today (Apr. 1).

For more:
- see Huawei's earnings statement
- view the company's full annual report [PDF]
- see this separate CEO announcement

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