Huawei posts record profits in 2021 (+75,9%) to 113,7 billion yuan despite the American bans that have put the Chinese giant on the edge of the mobile telephony market. However, the sanctions and production difficulties weighed on the global turnover, down 28,5% year over year (around $100 billion). This is the first annual decline since 2002, when Huawei released its results. The company's R&D investment expenditures are growing in 2021, accounting for 22,4% of its total revenue. The Shenzhen group communicates this by releasing its 2021 annual report, revealing that "the company has maintained solid operations during the past year".
"Performance is in line with our forecasts," said Huawei CFO Meng Wanzhou - who returned to China last year after nearly three years of detention in Canada. “Despite a decline in revenue in 2021, our ability to make profits and generate cash flow is increasing, and we are better able to face uncertainty today and invest in the future,” Meng said. And that thanks to the higher profitability of its main businesses, the company's cash flow from operating activities increased exponentially in 2021, amounting to 59,7 billion yuan. Its liability ratio also fell to 57,8%, and its overall financial structure became more "resilient" and "flexible".
Pandemic and sanctions weigh on receipts but 5G is driving growth
Pandemic pressure and the US trade ban weigh on the Chinese telecom giant's 2021 balance sheet. According to the report, also due to the slowdowns in the supply chain, the consumer division of the smartphone and computer giant - which includes sales from smartphones - halved its receipts, to 243,4 billion yuan. On the other hand, the business division, which includes the telecommunications components, lost 7%.
Huawei, however, has helped global operators distribute 5G networks leader in 13 countries. Together with operators and partners, the Chinese company has signed more than 3.000 commercial contracts for 5G applications in industry (5G is commercialized on a large scale in sectors such as manufacturing, mining, steel, ports and medical care ).
Under the wave of digital transformation, Huawei's corporate business achieved rapid growth and achieved sales of 102,4 billion yuan. More than 700 cities worldwide and 267 Fortune 500 companies have chosen the Chinese giant to carry out digital transformation, and the number of service and operations partners has grown to more than 6.000 partners worldwide.
Smart accessories, smart screens, TWS headsets, and consumer cloud services all achieved sustained growth, with wearables revenue and smart screens business increasing more than 30% year-over-year. More than 220 million Huawei devices are equipped with HarmonyOS, making it the fastest growing mobile terminal operating system in the world.
Furthermore, in 2021 Huawei also focused on building its openEuler, MindSpore, and HarmonyOS ecosystems based on the principles of open collaboration and shared growth. More than 8 million developers are currently using Huawei's open platforms, open-source software and development tools to explore new business scenarios and business models.
Huawei 2021: continuous investment in research and development
In 2021, R&D investment expenditures reached 142,7 billion yuan – up slightly from the previous year – accounting for 22,4% of annual revenue. The cumulative expenditure on R&D in ten years is over 845 billion yuan. Going forward, the company also plans to increase spending "to reshape its paradigms for fundamental theories, architecture and software, and build long-term competitiveness," it said in a statement. "We are in the midst of our restructuring and we still have to fight for our survival," underlined the current chairman Guo Ping. “The only way to do that is to keep investing”.
