Huawei profit stays flat, revenue growth slows

A product demonstrator looks at the new Huawei smartphone at the stand of the company during the Mobile World Congress in Barcelona, Spain. [Photo/Agencies]

HONG KONG - Chinese telecom equipment and smartphone maker Huawei Technologies Co Ltd said on Friday that its net profit edged up just 0.4 percent last year, its slowest annual growth since 2011.

Huawei - the world's No 3 smartphone maker behind Apple Inc and Samsung Electronics Co Ltd - said net profit rose to 37.1 billion yuan ($5.3 billion) in 2016.

The company's global revenue climbed 32 percent to 521.6 billion yuan, slightly slower than the 35 percent growth a year earlier.

Xiang Ligang, a smartphone expert and CEO of telecoms industry website cctime.com, said it will not be easy for Huawei to boost profit margins, because the costs of smartphone components are rising significantly.

"Due to the continuing depreciation of the yuan and the insufficient supply of smartphone displays and storage, it costs far more to manufacture a phone this year than before. But smartphone vendors are cautious to hike the prices of their products given mounting competition," Xiang said.

Strong competition in China's smartphone market, from previously little-known local rivals OPPO Electronics Corp and Vivo Communications Technology Co Ltd, cost Huawei its top spot as the biggest vendor in the domestic market last year.

Revenue from Huawei's consumer business group rose 44 percent to $26 billion, but lagged the company's forecast of $30 billion made a year ago.

It shipped 139 million phones last year, up 29 percent compared with a flat global smartphone market. The figure just missed an earlier target of 140 million.

Revenue from Huawei's carrier business group, which competes with Sweden's Ericsson AB for the top spot globally for telecommunications equipment, rose 24 percent to 290.6 billion yuan thanks to demand for 4G communications equipment.

Huawei's enterprise business group revenue climbed 47 percent to 40.7 billion yuan. Spending on research and development totaled 76.4 billion yuan.

REUTERS-CHINA DAILY