Huawei Reports Increase In Revenue By Growth In Smartphone Sales

A revenue surge of 40% year-on-year in the first half of 2016.

On the back of a steady growth in smartphone sales, Huawei, the Chinese telecom equipment giant, recorded a revenue surge of 40% year-on-year in the first half of 2016.
Last year the company said that the net profit rose 33% year-on-year in 2015, reaching USD 5.58 billion, while the revenue was USD 59.5 billion i.e. year-on-year increase of 37%.

Total sales revenue (2016) reached USD 36.7 billion or approximately INR 2,46,813 crore (January-June), as per the audited results released in the company statement. The consumer business, inclusive of smartphone sales has clearly had a major contribution to Huawei’s amazing performance.
Huawei, however, did not provide a breakdown of the figures.

The sales figures for its smartphone business will be out later this week, and the Huawei team said in a statement that its consumer business in the first half “maintained steady growth globally”.

Huawei is the largest network infrastructure providers globally, but the consumer products by Huawei are less popular outside China.

“We are confident that Huawei will maintain its current momentum, and round out the full year in a positive financial position backed by sound ongoing operations”, said Huawei’s Chief Financial Officer, Sabrina Meng.

International Data Corporation (IDC) reports say Huawei had more than 8% of the world smartphone market last year, putting Huawei at the third position behind Samsung and Apple. Samsung accounted for approximately 23% of the market, whereas Apple was just shy of 15%. Huawei increased its share from 5.4% to 8.3%, enabling it to be third in the global market share tables.

It is interesting to know that Huawei is not listed on any stock exchange, yet the company displays its financial information merely in the interest of transparency. Despite this, US officials view Huawei as a potential threat due to its alleged close links to the Chinese government, which the company clearly denies.
US Commerce Department had in fact issued a subpoena to Huawei, for the company turn over records pertaining to its use of US technologies in Huawei’s products shipped to Cuba, Iran, North Korea, Sudan and Syria.
Rumors that Huawei was developing its own mobile operating system to reduce the dependence on Google did not help them, as it was taken as a step to aid the Chinese government have sneak tools into the users in the US.

Huawei’s flagship products such as the Huawei P9, Mate 8, Honor V8 and MateBook have been doing pretty well and they have rightfully received critical acclaim from users the world over. Though the reception of the Huawei P9 might not have been as great as the company would have expected, the upcoming Mate S2 and Mate 9 (expected at IFA 2016 in Berlin in September) will likely help the flagship get back to the track.

Huawei holds strong in the mid-range smartphone market and during the first six months of 2015 revenues grew 30%, however, not everything was soaring high for Huawei in 2015 as the operating margin for the period saw a decline of 6% (going from 18% to 12%).

The decrease in the operating margin highlights the climate of the smartphone industry at large, as well as the competition within the different OEMs. While Huawei currently holds the third position in the global share of the smartphone market, moving past Apple or Samsung will be require a huge push, and it has been trying its best to find inroads into the western markets via investments.

When viewed against a backdrop of deteriorating smartphone shipments, Huawei has held onto its strong position in the Chinese market, as it increased its shipments from 11.2 million to 16.6 million in the first quarter of 2016, compared to the same period in 2015. The move in turn augmented its market share from 10.2% to 15.8% taking it to the peak of the Chinese leader board, while Apple lost ground tumbling from 12.3% to 11%.

While this may be seem as foreseeable in some quarters of the industry, success in the international markets is becoming more apparent. If a research from Gartner is to be believed, then sales of smartphones amounted to 349 million units in the first quarter of 2016, which is a 3.9% increase over the same period in 2015.

Originally published at Chip-Monks.