Huawei’s Profit Jumped to $7.3 Billion in 2017

The third-largest smartphone manufacturer in the world, Chinese Huawei, reported on Friday that its net profit in 2017 surged significantly due to cost control and solid performance in the domestic market.

Last year, Huawei’s net profit jumped 28 percent to 47.5 billion yuan ($7.3 billion). In the previous year, it stagnated due to traditionally modest margins in the smartphone business.

Cost Reduction of 85 Percent

The company attributes last year’s profit surge to an 85 percent reduction in net financing costs due to lower losses on exchange rates.

Their revenues in 2017 increased by 15.7 percent to 603.6 billion yuan, the weakest growth in four years.

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In the consumer products business, including smartphones, their revenues grew somewhat slower than the previous year, by 31.9 percent to 237.2 billion yuan, with a total of 153 million devices shipped.

In the previous year, growth in that segment was 43.6 percent.

Inroads into the European Market

The Chinese company increased its share in the European market last year, which allowed it to more easily navigate the blocked access to the most profitable smartphone market in the world – that of the USA.

In 2017, their revenues in the region encompassing Europe, the Middle East, and Africa grew by 4.7 percent to 163.8 billion yuan.

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In the North and South American markets, revenues fell by 11 percent to 39 billion yuan.

Reliance on the Domestic Market

Their support came from the domestic Chinese market, where they generate half of their revenue, and in 2017 they recorded a jump of 29 percent to 305 billion yuan.

Huawei is the third-largest smartphone manufacturer in the world – the top two positions are held by South Korean Samsung and American Apple – and the outlook for its business in the upcoming period is dampened by strong competition in the domestic market and declining sales in the USA, given Washington’s plans to increase import tariffs on Chinese technology products.