"From the data of revenue, profit, asset-liability ratio, operating cash flow, we can see that the financial resilience and ability of the entire company are improving, and such financial results are a foundation for us to ensure continuous investment in the future." On the afternoon of March 28, Huawei held the 2021 annual operating financial report press conference, Huawei's chief financial officer (CFO) Meng Wanzhou said when interpreting the financial report data.
This is Meng Wanzhou's first public appearance after returning to China in September 2021 and returning to work at Huawei. At the press conference, Meng Wanzhou wore a black blouse and a silver butterfly brooch pinned to his chest. Some netizens who watched the live broadcast pointed out that this may mean "breaking the cocoon into a butterfly".
On May 16, 2019, about half a year after Meng Wanzhou's unreasonable detention, the U.S. Department of Commerce officially included Huawei in the "Entity List" and carried out several rounds of continuous increase in the limit of Huawei. However, nearly three years have passed, and Huawei has not only not fallen, but has shown considerable resilience and strategic depth.
On the poster of the press conference behind Meng Wanzhou, although the sea surface is all frozen, the red icebreaker is still moving forward, leaving a straight track. Huawei's external environment is still harsh, but as Meng Wanzhou said, the past period was a difficult time for Huawei, and now, Huawei has passed through the "black barrier zone" - the most thrilling stage when the spacecraft returns to Earth.
Huawei CFO Meng Wanzhou (Courtesy of enterprises)
In 2021, Huawei achieved revenue of 636.8 billion yuan, and its net profit reached a record high
Huawei's earnings report was broadcast live in 9 languages.
"I remember the last time I attended the Huawei annual report conference, it was four years ago." Meng Wanzhou said in the opening statement that the world has changed greatly in the past 4 years, and the changes in the motherland have also been great, and in the months after returning to China, he has been constantly working hard to learn, hoping to keep up with the pace of society.
"Of course, you can also imagine that Huawei's changes are also very big, so today we use this opportunity to share the latest situation of Huawei." Meng Wanzhou introduced that in 2021, Huawei achieved revenue of 636.8 billion yuan and net profit of 113.7 billion yuan, reaching a record high, up 75.9% compared with the same period last year.
In 2020, Huawei's sales revenue was 891.4 billion yuan and net profit was 64.6 billion yuan, which recorded a certain increase compared with 2019. In 2021, the third year under external pressure, Huawei recorded a decline in revenue for the first time. According to Huawei's financial report data, Huawei recorded a "nother net income and expenditure" of about 60.8 billion yuan in 2021. Outside analysis believes that the sharp rise in net profit should include the income obtained from the sale of assets.
However, Meng Wanzhou also stressed that even if the income from asset disposal is not considered, Huawei's net profit margin is still higher than that of the previous year. "This is mainly from the company's measures in several aspects. One is that we have adjusted the sales structure of our products, so that our sales gross margin has been better improved. On the other hand, we have better collaborative management of the entire supply plan, which also greatly improves our entire cycle from order to revenue. Meng Wanzhou said that due to Huawei's continuous technology accumulation in the ICT field, Huawei has also greatly promoted the improvement of internal operation efficiency through digital operations.
At the same time, Huawei's operating cash flow in 2021 was 59.7 billion yuan, an increase of 69.4% compared with last year. "We have maintained a very good cash income, in other words, our income can be supported by cash collection, and the growth of operating cash flow can also be a very intuitive indication of the continuous growth of the hematopoietic capacity of the company's main business." Meng Wanzhou said that in 2021, Huawei's asset-liability ratio is 57.8%, down 4.5 percentage points from the previous year; net cash (cash owned plus short-term investments, excluding interest-bearing liabilities) reached 241.2 billion yuan, an increase of 11.9% compared with last year.
These data all show that although Huawei's overall revenue has declined, the company's ability to cope with external uncertainty has improved.
Operators' business performance is stable, enterprise business is growing steadily, and terminal services are transforming
At the press conference, Guo Ping, huawei's rotating chairman, said in introducing Huawei's business in 2021 that the company's overall operation is in line with expectations, the operator's business performance is stable, the enterprise business is growing steadily, the terminal business is developing rapidly in new industries, and the ecological construction has entered the fast lane.
Huawei Rotating Chairman Guo Ping (Courtesy of enterprises)
According to Guo Ping, in 2021, Huawei will achieve sales revenue of 281.5 billion yuan in the field of operator business. Huawei has helped global operators deploy leading 5G networks, and according to third-party reports, Huawei has built the best user experience of 5G networks in 13 countries, including Switzerland, Germany, Finland, the Netherlands, South Korea, and Saudi Arabia. Together with operators and partners, Huawei has signed more than 3,000 commercial contracts for 5G industry applications, and 5G has been commercialized on a large scale in manufacturing, mining, steel, ports, and medical care.
Under the wave of digital transformation, Huawei's enterprise business achieved rapid growth, achieving sales revenue of 102.4 billion yuan. For key industries such as government, transportation, finance, energy, and manufacturing, Huawei released 11 scenario-based solutions and established legions such as coal mines, smart highways, customs, and ports to integrate resources and efficiently serve customers. More than 700 cities and 267 Fortune Global 500 companies have chosen Huawei for digital transformation, and the number of service and operation partners has grown to more than 6,000.
The terminal business, which has a large dependence on advanced process chips, has been affected to a certain extent in the face of suppression, achieving sales revenue of 243.4 billion yuan. In the three restricted business areas of mobile phones, tablets, and PCs, Huawei's revenue has declined. However, at the same time, several types of businesses such as wearable devices and large screens have also experienced very obvious growth, of which wearable devices and smart screen business revenue increased by more than 30% year-on-year. With more than 220 million Huawei devices equipped with HarmonyOS (Hongmeng System), it has become the fastest growing mobile terminal operating system in the world.
Guo Ping said that in the past year, Huawei has adhered to the concept of openness, collaboration and altruism, and focused on creating a prosperous Euler, Shengsi, and Hongmeng ecosystems, and more than 8 million developers have adopted Huawei's open platform, open source software, and rich development tools to explore innovative business scenarios and business models.
"In 2022, we will continue to seek survival and development, and our survival and development in the future will rely on continuous strong investment in research and development." Guo Ping said that Huawei's problems cannot be solved by reducing food and clothing, Huawei should optimize the system architecture, improve software performance and explore theory, and build a highly credible and reliable supply chain by solving the problems of technology and technology.
"As we all know, Huawei is now facing difficulties that advanced technology cannot obtain, and if we want to survive, we must increase strategic investment and actively seek breakthroughs in the system when there are difficulties in leading a single point of technology." Guo Ping stressed.
Huawei's business operations in each region in 2021 (screenshot of financial report)
Ten years of R & D investment has accumulated more than 845 billion yuan, and the legion model aims to transform thousands of industries
Huawei on the road to survival, instead of slowing down the pace of research and development, is also increasing its research and development efforts.
In 2021, Huawei's R&D investment reached 142.7 billion yuan, accounting for a record 22.4% of the annual revenue. In the past decade, Huawei has invested more than 845 billion yuan in R&D expenses.
"For Huawei, the value of customers takes precedence over the interests of shareholders, and the investment in research and development is not constrained by profits, which is a practice we have always adhered to." Meng Wanzhou said at the press conference.
Guo Ping also pointed out that talent, scientific research and innovative spirit are the three major elements on which Huawei depends for survival and development. "The company proposes to let the geniuses come in groups, we let the experts play their full role in key areas, make the best use of their talents, let them 'rampage' in the field of science, use the concentration of talents to fight against the difficulty of technology, and continue to promote the innovation of theoretical architecture and software."
Huawei is still vigorously recruiting. Guo Ping revealed that in the first two years of last year, Huawei recruited about 26,600 outstanding fresh graduates, of which more than 300 were "talented teenagers" as defined by Huawei. In 2022, Huawei plans to recruit more than 10,000 fresh graduates. "Only excellent talents can solve Huawei's current situation and enable Huawei to develop further." Guo Ping said.
At a time when it is urgent to expand its business, Huawei is also integrating R&D with its business in a deeper way. The "legion" model mentioned earlier is to open up a new "front line" and "granary" for Huawei by strengthening front-line research and development. After the establishment of five corps, including the Coal Mine Corps, at the end of 2021, Huawei founder Ren Zhengfei issued a president's document announcing the establishment of a corps reserve working group and appointing 10 reserve corps leaders to further roll out the corps model.
Specifically, Huawei's "legion" model brings together basic research scientists, technical experts, product experts, engineering experts, and sales experts in delivery and service experts in one department, with engineering developers as the axis, and technical expertise for individual scenarios (for example, coal mines, smart photovoltaics, smart roads, etc.). This new organizational structure is conducive to breaking the boundaries of various departments of the existing company, and in a short period of time, "quickly assemble resources, intersperse operations, improve efficiency, and do a deep and thorough job in one area", so as to achieve rapid business growth.
For example, in the field of mining, Huawei is trying to reduce the number of people in the comprehensive mining surface with panoramic video, replace mine drivers with unmanned driving technology, and adopt intelligent inspection methods to reduce the risk of operators. With the blessing of a large number of digital technologies, it helps to "dig coal in suits and ties".
Fifteen legions, together with the existing BG and BU, pin their hopes on Huawei's ambition to use technology to transform thousands of industries, and are also the driving force for Huawei's sustained high-quality survival and development in a longer period of time, and it is also a responsibility for the sustainable development of science and technology enterprises. These industry-friendly innovation attempts can certainly bring new revenue to Huawei, but its deeper value is far from being measured by money itself.
"Huawei's greatest wealth is talent storage, thought storage, theoretical storage, engineering storage and method storage, as well as the efficient and orderly storage of our internal process management, which is the real value of Huawei behind our beautiful financial reports." In summarizing Huawei's 2021 financial report, Meng Wanzhou said.
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