LAST Friday, Huawei reported a 69 percent decline in profits for 2022, the biggest in the company’s history so far. Huawei executives led by Eric Xu, Rotating Chairman, and Sabrina Meng, Deputy Chairwoman of the Board, and Chief Financial Officer, reported this at the company’s annual report conference for its shareholders.
“In the midst of this storm, we kept racing ahead, doing everything in our power to maintain business continuity and serve our customers. We also went to great lengths to grow the harvest — generating a steady stream of revenue to sustain our survival and lay the groundwork for future development,” Xu told reporters who were present at the exclusive virtual press conference held at the SEDA Hotel in BGC.
“In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei’s operations,” Xu added and compared the challenges the company faced to plum blossoms that survive “a harsh winter freeze” and grow sweeter.
According to the report’s narration, operations were seen as “steady operations throughout 2022,” having generated CNY642.3 billion ($90 billion) in revenue and CNY35.6 billion ($5.6 billion) in net profits.
During the media press conference following the announcement of its revenues and losses, Huawei executives clarified its “non-market” referred to trade restrictions imposed by the Trump administration. Trump blacklisted Huawei, restricting its access to critical components and software. This has made it difficult for the company to manufacture and sell its products in the international market. As a result, Huawei’s revenue and profits have been impacted.
Xu said that its strategic initiatives and continuous investments in research and development are key to overcoming the losses, which also include China’s strict pandemic controls aside from rising commodity costs. It also made significant changes in its global and domestic operations. It sold its smartphone brand Honor in 2021 and continued to open up its platform capabilities across its HarmonyOS, Kunpeng, Ascend, and Cloud portfolio.
In 2022, Huawei’s total R&D spend increased by rose 13.2 percent to CNY161.5 billion ($23.4 billion), representing 25.1 percent of its total revenue. This is among the highest in Huawei’s history. Moreover, R&D staff increased 6.2 percent to 114,000 employees. The company currently employs 207,000 people globally.
Focusing on improving developer experience as well as enabling and supporting its ecosystem partners on all fronts. Huawei said it will need ten million developers starting this year and will further increase its over 40,000 partners to fuel ecosystem-based innovation and create greater value for its customers.
For 2023, the company will spend even more for It will spend 25.1 percent of its revenue for R&D CNY161.5 billion ($23.3 billion in 2022), bringing its total investments in R&D over the past 10 years to more than CNY977.3 billion ($114.82 billion.)
Meanwhile, Huawei’s CFO Meng said that the company had enough cash to support its “business operations and risk management.”
“Despite substantial pressure in 2022, our overall business results were in line with forecast. At the end of 2022, our liability ratio was 58.9 percent and our net cash balance was CNY176.3 ($25.6 billion). In addition, our balance of total assets reached one trillion yuan, largely composed of current assets such as cash, short-term investments, and operating assets. Our financial position remains solid, with strong resilience and flexibility…In times of pressure, we press on — with confidence,” she concluded.
