Chinese vendor Huawei reported a decline in earnings in the first half of the year, largely due to the impact of trade restrictions imposed by the U.S. government.
Huawei’s revenues declined by 29.4% year-on-year to CNY320.4 billion ($49.5 billion), while its net profit margin rose to 9.8% from 9.2% in H1 2020.
In a statement, rotating chairman Eric Xu said the financial results in H1 were in line with the vendor’s forecasts. “Despite a decline in revenue from our consumer business caused by external factors, we are confident our carrier and enterprise businesses will continue to grow steadily.”
“Our aim is to survive, and to do so sustainably,” the executive said.
Revenues from Huawei’s Carrier Network Business Group (CNBG) declined by 14.2% to CNY136.9 billion, mainly due to the fact that local operator China Mobile delayed its 700 MHz 5G tender to mid-July. Huawei had secured 60% of the contract.
The vendor’s Consumer Business Group sales reached CNY135.7 billion, down 46% year-on-year. Enterprise business revenue grew 18.2% to CNY42.9 billion.
“2021 will be another challenging year for us, and it’s also the year that our future development strategy will begin to take shape. We have spent a long time reviewing and adjusting our business portfolios and are confident in our ability to survive and do so sustainably. There is currently a lot of growth momentum in the Chinese economy, and overseas markets are gradually recovering from COVID-19. We believe deeply in the power of digital technology to provide fresh solutions to the problems the world is facing right now,” Xu said in keynote speech at Huawei’s Global Analyst Summit (HAS), in April 2021.
The company also believes that the implementation of 5G infrastructure is enabling telecommunications operators to maximize revenues. “In countries where 5G is developing faster, operators have seen faster revenue growth, and these countries also tend to have better digital infrastructure overall. Taking China as an example, in less than 18 months, more than 820,000 5G base stations have been deployed, and Chinese operators achieved a 6.5% increase in revenue and a 5.6% increase in net profits in the first quarter this year,” Ryan Ding, president of Huawei’s Carrier Business Group, said during a presentation at MWC Barcelona 2021.
In 2020, Huawei had reported revenues CNY 891.4 billion, up 3.8% year-on-year while its net profit had increased by 3.2% to CNY 64.6 billion.
In May 2019, the U.S. Department of Commerce added Huawei to its Entity List over security concerns, a decision that effectively banned the company from buying parts and components from U.S. companies without U.S. government approval.
Under the order, Huawei needs a U.S. government license to buy components from U.S. suppliers.
Huawei’s founder and CEO, Ren Zhengfei, has previously said that the company believed that it will be extremely unlikely that the new U.S. administration would lift the current restrictions imposed by former President Donald Trump.
