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Huawei 2018 Analyst Summit Day One: Smartphone Fueled Huawei’s Revenue Growth in 2017

by Yiwen Wu | Apr 17, 2018

More than 600 analysts and media gathered from the world in Shenzhen, China for Huawei Global Analyst Summit 2018 from April 17-19th. Our analysts from Wireless Smartphone Strategies (WSS) services are attending the event.

The key theme of Day One is an overview of Huawei’s corporate strategy and a brief performance review. Huawei has a good 2017, in terms of revenue growth. It posted RMB 604bn (~US$ 93bn) revenue in 2017, up +16% YoY. Consumer BG (smartphone, MBB and other products) recorded RMB 237bn (~US$ 38bn) revenue, up +32% YoY, thanks to the solid performance of its smartphone business. Consumer BG is now contributing to 39% of Huawei’s total revenue this year, up from 34% in 2016. Meanwhile, the revenue contribution of Carrier BG dropped to 49% from 51% a year ago.

However, Huawei’s result in 2017 is mixed in terms of profitability. Its operating profit margin increased to 9.3% in 2017, from 9.1% a year ago. However, the margin enhancement is largely driven by the vendor’s significant reduction in foreign exchange losses. If this finance-related factor being excluded, Huawei’s margin is actually lower than a year ago. It is quite understandable, given the lower-margined consumer BG is taking greater portion in Huawei’s overall revenue structure.

Geographically, Chinacontributed to 51% of Huawei’s total revenue in 2017, up from 46% in 2016. Europe, Africa, Middle East and Asia Pacific, all witnessed healthy growth in 2017, but Americas experience a sharp -11% YoY decline by revenue.

Regarding to the smartphone business, Huawei remained as the world 3rd largest vendor by volume and by value in 2017, according to our latest report from Wireless Smartphone Strategies (WSS) services. (Our WSS services track and forecasts global smartphone shipments by region by quarter for 27 of the world's largest vendors from 2015 to 2019 in this report. We are optimistic about Huawei’s shipment performance in 2018. We expect the vendor will benefit from its strategic shift towards low-end models. It will also benefit from the on-going consolidation in Chinese smartphone market.

While smartphone business is likely to fuel the revenue growth for Huawei in 2018, now the question to address is its contribution to the group profit margin. Compared with Apple and Samsung, the operating margin of Huawei’s smartphone business remained slim. Given the vendor shift-back to lower-end models, what is the expected change on the vendor’s strategies on product, channel, and branding in 2017? Please stay tuned for our day two blog.

Photo Day One for Blog

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