On the afternoon of March 28, Huawei released its 2021 annual report, showing that the company achieved global sales revenue of 636.8 billion yuan, a year-on-year decrease of 28.6%; net profit was 113.7 billion yuan, a year-on-year increase of 75.9%.
It is worth noting that last year, Huawei's R&D investment reached 142.7 billion yuan, accounting for 22.4% of its total revenue. The cumulative R&D expenditure invested in ten years exceeded 845 billion yuan.
Meng Wanzhou, Huawei's chief financial officer, said that the proportion of Huawei's R&D investment last year was at a historically high level and will continue to make high-intensity investment. "Our scale has become smaller, but our profitability and cash flow acquisition capabilities have increased," she said.
Regarding the Hongmeng planning and chip issues that are of concern to the outside world, Guo Ping, Huawei's rotating chairman, said that Huawei's Hongmeng mobile phone business currently has no overseas development plans. Huawei will strengthen its investment in chip companies. In the future, Huawei's chip solutions may adopt a multi-core structure.
As for the reason for Huawei's overall decline last year, Meng Wanzhou said that it was mainly affected by multiple rounds of US sanctions, the slowdown in domestic 5G demand and the pressure brought by the epidemic.
From the perspective of the main business structure, in 2021, Huawei's sales revenue in the operator business field will be 281.5 billion yuan, a decrease of 21.1 billion yuan compared with 302.6 billion yuan in the same period, and enterprise business revenue will be 102.4 billion yuan, an increase of 2.1 billion yuan compared with the same period. The consumer business revenue was 243.4 billion yuan, a decrease of 239.5 billion yuan compared with the same period.
In terms of the proportion of subdivided business segments, operator business, consumer business, and enterprise business accounted for 44.2%, 38.2%, and 16% of the total sales revenue, respectively. Among them, the proportion of operator business increased by 10.2 percentage points over the previous year. The proportion increased by 4.8 percentage points, and the proportion of consumer business decreased by 10 percentage points.
Talking about how to overcome the difficulties faced by the consumer business, Guo Ping said: "The chip has the characteristics of strong computing power, low power consumption, and small size. International sanctions for many years have brought great difficulties to Huawei's consumer business. We are actively working with Huawei. All parties discussed possible solutions, and vigorously expanded new fields such as wearables, smart screens, and whole-house intelligence and more markets." The financial report shows that revenue from smart wearables and smart screens increased by 30%. Huawei's overseas revenue accounted for more than 50%.
Regarding the chip R&D and industrial chain construction issues that the outside world is concerned about, Guo Ping believes that solving semiconductor problems is a complex and long-term project that requires patience, and related investment industries will be more valuable. "We are actively deploying the chip industry. In the future, our chip solution may adopt a multi-core structure to improve chip performance and inject vitality into it, thereby increasing sustainable profitability."
Huawei will invest 142.7 billion yuan in research and development in 2021, a record high. Due to the improved profitability of its main business, Huawei's operating cash flow will increase significantly in 2021, reaching 59.7 billion yuan; the asset-liability ratio will drop to 57.8%.
Meng Wanzhou said that abundant cash flow is the guarantee of Huawei's high investment in the future. Huawei will invest in three aspects: system architecture optimization, software performance improvement and basic theoretical exploration.
Huawei pinned its hopes on future scale and profit expansion on the various "corps" it built. So far, Huawei has launched 11 scenario-based solutions for key industries such as government, transportation, finance, energy, and manufacturing, and established "corps" such as coal mines, smart roads, customs, and ports.
Specifically, Huawei has signed more than 3,000 commercial contracts for 5G industry applications with operators and partners, promoting large-scale commercial use of 5G in industries such as manufacturing, mining, steel, ports, and medical care. 5G toB moves from industry exploration to scale replication.
Regarding the goal of Huawei's "Legion", Guo Ping said that Huawei will shorten the management chain and product cycle through the 'Legion', operate in a short chain, and quickly meet the needs of industrial, low-carbon and other markets. Huawei hopes to create new business model and generate revenue and profits for Huawei. Guo Ping also revealed that Huawei insists on not building cars, but will use its 30 years of accumulated ICT experience to boost the ecosystem. Huawei's smart auto parts business has listed more than 30 smart auto parts. A number of industrial chain partners.
