US sanctions hit Huawei, sales drop 16.5 per cent after selling Honor biz

Hit hard by various US sanctions, Chinese conglomerate Huawei on Wednesday reported 16.5 per cent decline in sales for the first quarter of 2021, due in part to selling the Honor smart device brand in November 2020.

The company, however, said that its net profit margin was up 3.8 percentage points (year-on-year) at 11.1 per cent which was the result of the company’s ongoing efforts to improve quality of operations and management efficiency, as well as a patent royalty income of $600 million.

In Q1, Huawei generated 152.2 billion yuan (roughly $23.5 billion) in revenue, a 16.5 per cent decrease year-on-year.

Its network business maintained steady growth, while consumer business revenue declined.

“2021 will be another challenging year for us, but it’s also the year that our future development strategy will begin to take shape,” said Eric Xu, Huawei’s Rotating Chairman.

“No matter what challenges come our way, we will continue to maintain our business resilience. Not just to survive, but do so sustainably. As always, we will remain focused on the needs of our customers and keep delivering practical business value,” Xu added.

Struggling to keep its consumer business afloat in the wake of the US sanctions, Huawei in November announced to sell off its Honor smartphone business assets to China-based Shenzhen Zhixin New Information Technology Co Ltd.

The company said that the sale—which could be around $15 billion according to multiple reports—will help Honor’s channel sellers and suppliers make it through this difficult time. Honor smartphones have been hit by US sanctions that prevent Huawei from doing business with US companies.

Huawei said it is driving efforts to fully unleash the value of 5G.

“As always, we remain committed to technological innovation and investing heavily in R&D as we work to address supply continuity challenges caused by restrictions in the market”, stressed Xu.

“We will continue making breakthroughs in basic science and pushing the frontiers of technology.”