That's the actual booked revenue figure for 2008, rather than the value of contracts signed, which is the number Huawei uses in its press releases. For example, Huawei says its contract sales totaled $23.3 billion in 2008: That puts 2008's ratio of actual revenues to contract sales at 78.5 percent, roughly in line with 2007.
That $18.33 billion figure makes Huawei the fifth largest telecom infrastructure supplier by revenues for the second year running, with only Cisco Systems Inc. (Nasdaq: CSCO), Ericsson AB (Nasdaq: ERIC), Alcatel-Lucent (NYSE: ALU), and Nokia Networks reporting higher 2008 numbers. That ranking could change this year, though, as Huawei looks set to leapfrog some of its fiercest rivals. (See Huawei Closes In on Rivals.)
According to the full year 2008 figures, which are audited by KPMG International "in accordance with IFRSs" (International Financial Reporting Standards), Huawei achieved a gross profit margin of 39.7 percent, slightly better than in 2007, and net income of $1.15 billion, a 20.3 percent improvement on the previous year. (Note: The vendor's 2007 numbers have been adjusted to include its mobile handset business, which wasn't included when Huawei issued its 2007 annual report.) (See Huawei Reports 2007 Revenues of $12.5B.)
Table 1: Huawei's 2008 Financials
In US$ millions | 2008 | 2007* |
Revenues | $18,329 | $12,840 |
Gross profit | $7,269 | $4,903 |
Gross margin | 39.7% | 38.2% |
Operating profit | $2,374 | $1,248 |
Operating profit margin | 13% | 9.7% |
Net financing cost** | $971 | $199 |
Net income | $1,151 | $957 |
* 2007 numbers adjusted to include handset business; those numbers weren't included in the 2007 annual report ** Foreign exchange loss plus other finance expenses Source: Huawei |
Table 2: Huawei's Contract Sales and Revenues, 2002-2008
Year | Reported value of contract sales | Reported audited revenues | Audited revenues as % of reported contract sales |
2008 | $23.3 billion | $18.3 billion | 78.7% |
2007 | $16 billion | $12.6 billion | 78.5% |
2006 | $11 billion | $8.5 billion | 77% |
2005 | $8.2 billion | $6 billion | 73% |
2004 | $5.6 billion | $3.8 billion | 68% |
2003 | $3.8 billion | $2.7 billion | 71% |
2002 | $2.7 billion | $2.1 billion | 78% |
Source: Huawei |
Huawei's net income would have been higher if it weren't for a significant hit resulting from last year's currency exchange fluctuations: Of its total $971 million net financing cost, $776 million came from its "foreign exchange loss," compared with $30.7 million in 2007, while "other finance expenses" accounted for the remaining $195 million.
Unrivaled growth
The vendor's growth during the past few years has been dramatic. As the table below shows, its 2008 revenues are more than double its 2006 revenues and more than treble its 2005 revenues.
Table 3: Key Huawei Financials, 2001-2008
Years ended December 31 (in US$ millions) |
2008 | 2007* | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 |
Revenues | $18,329 | $12,840 | $8,504 | $5,982 | $3,827 | $2,694 | $2,128 | $2,290 |
Net income | $1,151 | $957 | $512 | $681 | $624 | $384 | $108 | $258 |
Cashflow from operations | $946 | $1,044 | $743 | $708 | $396 | $385 | $204 | $255 |
Operating profit margin | 13% | 10% | 7% | 14% | 18% | 19% | 17% | 24% |
* 2007 numbers adjusted to include handset business: those numbers weren't included in the 2007 annual report Source: Huawei |
And that growth is set to continue this year, if Huawei's forecasts are accurate. Despite the economic downturn, the Chinese company said in January that it expects the value of contracts signed this year to reach $30 billion, and if it can maintain its revenue-to-contract-sales ratio of nearly 79 percent, that would translate into revenues of $23.7 billion. (See Huawei Predicts 29% Growth in 2009.)
Here are some other details of interest from Huawei's annual report:
— Ray Le Maistre, International News Editor, Light Reading