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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7 Comments

1. kiko007

Posts: 7506; Member since: Feb 17, 2016

That's odd...

2. You_Dont_Say

Posts: 431; Member since: Jan 26, 2015

It's not odd. You are just stupid. In the Annual report: - Research and development costs are up 30% year-over-year - SGA expenses are up ~40% year-over-year

4. Ordinary

Posts: 2454; Member since: Apr 23, 2015

PA didnt mention it so who can blame him? Btw whats up with ad hominem?

3. manojmcn

Posts: 634; Member since: Jul 16, 2015

With no key features to differentiate , Huawei cannot grow beyond this level. Making good phoes with good battery life can push them max upto 3rd position which they already are. But their flagship lack that wow factor to beat the flagships of Apple & Samsung.

5. JohanP

Posts: 38; Member since: Apr 04, 2017

I think for short period huawei will be a Brand like a Samsung and Iphone. Over the years the sell more and more devices. And all device is very good with great performance.Camera The battery is very good and also have good look.

6. Spedez

Posts: 542; Member since: Aug 29, 2014

Chinese crap. The last phone I would pick.

7. Omran2000

Posts: 101; Member since: Aug 18, 2016

What's the device you have ?

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