Healthy order book boosts Huawei’s profits

9 Feb 2005

China’s number one equipment manufacturer Huawei Technologies posted a 22% rise in net profits in 2004 to USD470 million, on the back of a growing order book for its products. According to the Financial Times, unaudited figures provided by the company show a 46% hike in orders last year to USD5.58 billion. Huawei, which is mounting a major expansion into international markets, says it plan to publish official audited financial results in March. Xu Zhijun, executive vice-president of Huawei, said the company had adopted a different strategy to that employed by domestic PC and consumer electronics companies Lenovo and TCL, by taking advantage of China’s ‘slow-cost development’.

Mr Xu said that Huawei’s cash flow for 2004 dipped by USD27 million to USD358 million, while R&D spending rose sharply to USD480 million and return from net assets reached 24% from 23% in 2003. The company has struck OEM deals for optical network equipment with several undisclosed North American companies, following a review to assess whether it needed to rationalise its diverse product base to compete with international rivals. ‘Previously, we were thinking whether our product lines were too diversified; whether we needed to narrow them down. Since last year, we have a clear idea of the advantage of diversification, because whatever our customers need we can provide them,’ Mr Xu said.