Huawei reports slump in 2016 profits despite expanding global market share

Huawei, the world's largest telecommunications equipment manufacturer, has reported a net profit of CN¥37.1bn ($5.3bn, £4.2bn) for 2016, a mere 0.4% rise from the previous year, and the company's lowest profit growth in five years.

The slump is in sharp contrast to the 32% growth in profits from 2014 to 2015.

Analysts attribute the dramatic drop to increased focus on investments and research and development (R&D), along with a push to capture the high-end smartphone market.

Huawei had recently launched the P10, its flagship smartphone brand that would potentially compete with Apple and Samsung devices.

In an attempt to be in forefront of digital innovation, Huawei intends to transition into a purely cloud- based platform for all of its products and services.

Huawei also intends to enter into partnerships with telecom carriers in order to push digital transformation, optimise return on investment, and increase operational efficiency.

"Built on a solid foundation of quality and services, Huawei aims to join the ranks of high-end consumer brands," remarked rotating and acting chief executive officer Xu Zhijun.

"We are cultivating a cloud ecosystem around user experience, and developing our strength through device-cloud synergy. Ultimately, this will set Huawei apart as a brand that consumers both like and trust."

Huawei continues to dominate the Chinese market with a year-on-year revenue growth of 41%. Within the general Asia Pacific region, the company has credited expansion in the Indian and Thai network infrastructure investments, and gaining a foothold in the Japanese tablet market, for its 36.6% regional revenue growth.

While Huawei is relatively lagging behind in the Americas, it has attributed an overall 13.3% revenue growth in the region to Mexico's increased investment in communication networks.

The Shenzhen-based firm is the world's third largest smartphone maker after Apple and Samsung. Despite the fall in profits, the company has expanded its foothold in the market. Globally, it shipped 29% more smartphones in 2016, amounting to a total of 139 million units.

Huawei has registered a strong presence in the Europe, the Middle East and Africa region with a 22.5% rise in revenue, thanks to its smartphones.