Huawei's phone sales rose last year by 30%, but profit margins declined

Huawei's phone sales rose last year by 30%, but profit margins declined
After Samsung and Apple, the third largest smartphone manufacturer in the world in Huawei. Last year, the company sold some 140 million handsets including units rung up in the U.S. and other Western markets. Even though revenue rose 32%, operating profit rose just .4% year-over-year. That would seem to indicate that the company is experiencing a decline in profit margins. And sure enough, margins in 2016 declined by 3 percentage points to 9%.

The reason for the drop in margins isn't necessarily due to lower phone prices. Actually, Huawei's consumer products division is to blame. This division typically has lower profit margins than the one that serves the enterprise. Normally that wouldn't matter, but in 2016 (thanks to heavy smartphone sales) the consumer business represented a higher percentage of Huawei's overall $75.1 billion in revenue.

This trend could continue as Huawei is shipping more smartphones to the U.S. and other countries in the West. We should see Huawei make a huge push to sell its handsets all over the world, especially if it wants to keep the goal set by consumer business chief Richard Yu to become the top smartphone provider on the planet by 2021.

source: Huawei via AndroidAuthority


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