Stay the Course: Creating Value for Our Customers
Ladies and gentlemen, good afternoon and welcome.
As you all know, over the past six months Huawei has been under immense pressure from the US government. Since the beginning of the year, more than 2,600 media representatives from around the world have visited Huawei.
They have interviewed our management teams and employees, visited our labs and production lines, and have eaten side-by-side with us in various canteens and coffee shops around campus. They came to see with their own eyes what Huawei's all about. I'm sure you've all witnessed the work ethic of Huawei's people under such great pressure.
In that same spirit of openness, I would like to share with you Huawei's business results for the first half of 2019.
H1 2019 results: Solid performance, stable growth
In the first half of 2019, Huawei generated CNY401.3 billion in revenue – a 23.2% increase year-on-year. Our net profit margin was 8.7%.
Broken down by business group:
- Revenue from our carrier business was CNY146.5 billion
- Revenue from our enterprise business was CNY31.6 billion
- Revenue from our consumer business was CNY 220.8 billion
This has been a unique period in Huawei's history. Given the situation, you might think that things have been chaotic for us. But that's far from the case. We have been working hard to ensure smooth operations, and our organization is as sound as ever. With effective management and an excellent performance across all financial indicators, our business has remained robust in the first half of 2019.
The US entity list has had some impact on our development. But both the scope and extent of this impact is controllable. Our core products have not been significantly affected. Our customers still believe in us. They continue to choose Huawei and buy our products, which shows they trust us. I'd like to take a moment here to thank our customers around the world for their ongoing trust and support.
We are leading global 5G rollout, with steady production and shipment of ICT infrastructure
Our suppliers and partners continue to place great trust in Huawei too. They have given us fantastic support, helping us ensure a stable supply chain and timely delivery to our customers. Our approach to business continuity management and supply diversity has withstood the test of the market. Neither production nor shipment has been interrupted – not for a single day.
For our ICT infrastructure business, overall production and shipment schedules have remained mostly stable. Despite a dip in our intelligent computing sales, shipments of ICT equipment have continued to increase. That includes equipment for wireless networks, optical transmission, data communications, and IT products.
This is especially true in the 5G market. Huawei is the leader in global 5G rollout. We have secured 50 commercial 5G contracts and have shipped more than 150,000 base stations to customers around the world.
Global consumers still love and trust the Huawei brand
In our consumer business, smartphone shipments (including Honor phones) reached 118 million units, up 24% YoY. We have made great progress delivering services to our consumers across all scenarios, and have seen rapid growth in shipments of tablets, PCs, and wearables.
We are beginning to scale our broader device ecosystem to deliver a more seamless intelligent experience across all major user scenarios. To date, the Huawei Mobile Services ecosystem has attracted more than 800,000 registered developers worldwide, and 500 million users.
Huawei smartphones are now leading the market in terms of photography, AI, connectivity, and battery life. And that's how we've continued to earn the trust of our customers. We will double our efforts to create more devices – and better devices – to pay it forward.
Our strategy and investment remain unchanged
To look at our H1 performance objectively, it's true that revenue grew fast up through May. Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That's not to say we don't have difficulties ahead. We do.
We will need to heavily invest both in people and materials to replace old software and hardware versions, manage supply continuity, and ensure smooth delivery to our customers around the globe. All of these factors will have an effect on future business performance.
You've probably seen an image of an airplane riddled with bullet holes around campus. The same image I had on screen just a moment ago. Huawei is like that plane.
We need to patch up these holes without losing altitude. We've just about finished patching up our carrier business, and now we're focused on our consumer business. We will keep fighting for survival.
Difficulties in the outside environment may affect the pace of our growth in the short term, but we will stay the course. We will not change our strategic direction. And we will definitely see this through.
While we're working hard to ensure our survival, we will continue investing as planned – including a total of CNY120 billion in R&D this year.
We'll get through these challenges, and we're confident that Huawei will enter a new stage of growth after the worst of this is behind us.
Open collaboration benefits everyone
Huawei will continue to work together with others regardless of the challenges we face. We won't succumb to insularity or close ourselves off from the outside world. We want to work more closely with partners across the value chain to create greater value for our customers, and a better experience for consumers. Together, we can promote the healthy and sustainable development of the entire ICT industry.
We're confident in what the future holds and will keep pushing ahead
For those outside the company, I'm sure the past six months have seemed pretty turbulent for us. But inside the company things are calm. We're focused on our work, ensuring smooth delivery, and providing our customers with the best possible service.
No matter what difficulties come our way, we are fully confident in what the future holds for us.
For one, the ICT industry is still booming. The world has just started going digital and embracing artificial intelligence, and this will create massive room for growth.
Our global customers and partners have placed a lot of trust in us, and we have been taking concrete steps to honor our commitments to them. Our confidence is mutual, and growing stronger with time.
We have also found that when organizations are placed under incredible pressure, it often coincides with incredible growth potential. In a way, the US government's foray against Huawei has helped us understand our objectives better. It has enhanced collaboration and has galvanized our people. This pressure has brought us together and reinvigorated the company.
We are now at a historical moment. It has created an opportunity for our people to shine and has attracted many bright minds from around the world to join us.
I believe that two or three years from now, Huawei will be run by a team that's absolutely brimming with passion. They will be the ones who manage the company effectively and support a new round of growth.
We're still climbing up, step by step towards the pinnacle of the ICT market. We have chosen the hardest path, but we have no regrets.
Even in the most difficult times, we have stuck to our decisions, because they were made in the pursuit of our ideals. This sense of mission has enabled us to stay focused and dedicated, and has helped us to stand at the forefront of the world in many fields.
Through open collaboration, we have joined forces with some of the world's top scientists and brightest minds. We will explore the future together and bring the benefits of digital technology to everyone.
Our commitment to our ideals and mission is the driving force behind our progress. There is no turning back. All we can do is stay the course and forge ahead. We are confident we will make it in the end.