Revenue is down but profit is up

Huawei’s annual report released Monday is the first high-profile corporate event led by Chief Financial Officer Meng Wanzhou since returning to China from Canada after a nearly three-year extradition battle with America.

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Huawei reported a record drop in first-year revenue in 2021 as US sanctions continue to hurt the company.

However, the Chinese tech giant’s earnings spiked last year as it focused on driving profits.

Huawei’s chief financial officer, Meng Wanzhou, said in a statement: “Despite the decline in revenue in 2021, our ability to generate profits and generate cash flow is increasing and we have more likely to deal with uncertainty.”

Huawei’s annual report released on Monday is the first high-profile corporate event that Meng has led since return to China from Canada, where she was involved in a nearly three-year extradition battle with the United States. Meng speaks during a press conference at Huawei’s headquarters in Shenzhen.

In 2021, Huawei brought in revenue of 636.8 billion yuan ($99.9 billion), down 28.5 percent year-on-year. That was the first annual revenue decline based on public reports since 2002.

Net profit last year rose 75.9% year-on-year to 113.7 billion yuan.

Under former US President Donald Trump, Huawei was placed on the US blacklist known as the Entity List This has restricted American companies from exporting critical components and software to the company. Washington has seeks to cut off Huawei’s access to high-end chips required for the smartphone and its other hardware. Huawei’s smartphone market share globally As a result, it went downhill.

Meanwhile, the US has called Huawei a national security threat and urged other countries not to use their telecommunications equipment for next-generation 5G mobile networks. Huawei has repeatedly denied this is a national security threat.

These moves have had a major impact on the company’s business units. Huawei’s consumer division, which sells smartphones and other products, brings in 243.4 billion yuan in 2021, down nearly 50% year-on-year.

The aircraft carrier business, which also includes sales of telecommunications equipment, posted revenue of 281.5 billion yuan, down about 7% year-on-year.

One bright spot of the company is its fledgling enterprise business, the current smallest division, but one Huawei is focusing a lot on solving the problem. Huawei’s enterprise unit includes cloud computing.

To counter US sanctions, Huawei is investing heavily in new areas including the auto industry and hire more scientists focus on technology development.

Huawei spent 142.7 billion yuan on research and development in 2021, slightly higher than the 141.9 billion yuan figure in 2020.

“Relying on talent, scientific research and a spirit of innovation, we will continuously increase our investment to reshape the paradigm for fundamental theories, architecture and software, and build our long-term competitiveness,” Guo Ping, Huawei’s rotating chairman, said in a press release.

Huawei is not a public company but publishes annual results that it says have been audited by accounting firm KPMG.

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