Huawei is "making crazy money"?

Old solution

2024-05-01 09:03Published in Beijing

Huawei's first quarter report for FY24 was released, with operating income of about 178.5 billion yuan and operating profit of 22.4 billion yuan.

Most people are not interested in absolute values, but when they look at the relative value of revenue growth of 36.66% and profit growth of 578% year-on-year in the first quarter of last year, they began to exclaim that Huawei is "far ahead" again......

In fact, as long as you simply put the quarterly report data on the table, you can see that Huawei's revenue and profit in the first quarter of 24 have both increased, although the magnitude is amazing, but the essence is that the first quarter of 23 is too bad.

From the point of view of income level, the first quarter of 24 and the second quarter of 23 are basically the same, so the revenue level of more than 170 billion yuan in a single quarter has not made much breakthrough in scale;

From the perspective of gross profit level, the gross profit margin in the first quarter of 24 was only 50%, compared with 54% in the first quarter of 23, which is still a lot down, so it is estimated that the operator business with a higher gross profit level has contracted with the contraction of the three major operators 5G investment, and although the sales volume of the mobile phone business has increased its revenue year-on-year, it has lowered the gross profit level because of the higher cost of self-developed chips.

From the perspective of operating profit level, the operating profit margin of 13% in the first quarter of 24 is back to the normal level of enterprise operation, and the significant increase of 3% in the first quarter of last year is mainly due to the decline in the proportion of R & D expenses: R & D expenses in the first quarter of this year were 41.6 billion, although they also increased by 5 billion year-on-year, but because the revenue increased by 47.9 billion year-on-year, the increase was more, so the R & D rate was only 23%, 5% less than the same period last year, which made the greatest contribution to the improvement of operating profit margin.

Therefore, to a certain extent, Huawei's year-on-year increase in operating profit of 19.1 billion yuan (or 578% year-on-year increase) in the first quarter of 24 comes from the incremental revenue brought by the hot sales of Mate60 series mobile phones and Wenjie automobiles on the one hand, and on the other hand, it also benefits from the decline in the proportion of R&D expenditure.

For the company's operation, the scope of business has expanded, the categories that can be sold have increased, and the scale of income has gone up; although R&D expenses, sales expenses, and management expenses will also increase, as long as the increase in expenses is less than the increase in revenue, the operating profit will be earned.

Therefore, Huawei's significant increase in operating profit in the first quarter of '24 is a typical case of scale effect.

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