HONG KONG (Reuters) – China's Huawei Technologies [HWT.UL]the world's third-largest smartphone maker, posted a 28-percent gain on Friday, driven by cost controls and solid domestic market performance.
The outlook for Huawei, behind Samsung Electronics ( 005930 .KS ) and Apple Inc ( AAPL.O ) in smartphones, is strong Domestic market competition and declining sales in the United States clouded as Washington plans higher import tariffs on China's technology products. Shenzhen-based Huawei-based company posted a net profit of 47.5 billion yuan (US $ 7.3 billion) in 2017, an increase of 0.4 percent in 2016. The increase was partly due to the 85 percent decreased financial result attributable to minor currency losses.
Sales grew 15.7 percent to 603.6 billion yuan. This corresponds to the company's previous forecast and the lowest growth in four years.
Huawei vowed to focus on improving earnings after reporting the lowest earnings growth in five years in 2016 as the low-margin smartphone business hurt earnings growth.
Huawei's consumer business, which includes smartphone operations, grew 31.9 percent to 237.2 billion yuan (US $ 37.85 billion) after 153 million smartphones shipped last year. The segment grew 43.6 percent a year ago.
The Carrier business, which accounts for nearly half of the Group's total revenue, grew 2.5 percent, slowing from 23.6 percent in 2016 as telecoms operators embarked on the introduction of 5G wireless in the coming years Prepare next-generation networks.
"We conducted 5G pre-commercial tests with more than 30 leading carriers … and prepared for the upcoming end-to-end commercial deployment of 5G," it said.
Huawei launched its most expensive flagship smartphone in Europe this week – the Triple Camera P20 series, which sells for $ 649-899 ($ 800- $ 1108) – a new head on Head with Samsung and Apple to compete in the high-end phone market.
European market share gains helped Huawei offset its exclusion from the US, the world's most profitable telemarketing market.
Sales in America fell 11 percent to 39 billion yuan.
($ 1 = 6.2675 Chinese Yuan)
($ 1 = 0.8112 Euro)
Report by Sijia Jiang and Farah Master; Arrangement by Sunil Nair and Jacqueline Wong