This article is from WeChat official account:City (ID: ishijie2018)< span class = "text-remarks">, author: XIA Hsi, editor: Li Shuguang, title figure from: vision China
At the honorary farewell party in November 2020, Ren Zhengfei’s speech made people cry: “It is difficult to get along with each other, and the autumn wind brings cold and yellow leaves.”
At the end of 2020, the 10 billion yuan deposit for the sale of Glory has been paid, and the remaining payment will also be paid by the end of June 2021. At that time, glory will completely disappear in Huawei’s data.
Send away glory, launch Hongmeng 2.0, and release Mate 40 series mobile phones equipped with Kirin 9000. This is Huawei’s efforts to save itself in 2020.
How much impact and challenge did Huawei encounter this year?
On March 31, Huawei’s 2020 annual report released some practical clues. In 10 years, income growth has been the lowest; in 10 years, cash and short-term investment have experienced negative growth for the first time; in 7 years, operating activities have the lowest cash flow. The three indicators are enough to see Huawei’s difficulties in 2020.
1. Operating cash flow has shrunk by more than 60%
In April 2020, Ren Zhengfei once stated that Huawei will continue to show an overall growth trend in 2020, but the rate will not be too high. Judging from the latest annual report data, this is indeed the case.
On the afternoon of March 31, 2021, Huawei held a 2020 performance conference. The rotating chairman Hu Houkun explained various performances.
In general, the key words of this annual report can be summarized as, “revenue and profit growth slowed down, and cash flow performance is poor”.
The annual report shows that Huawei’s 2020 revenue and net profit will be 891.4 billion yuan and 64.6 billion yuan, respectively, with a year-on-year increase of 3.8% and 3.2%, which is significantly lower than the annual compound of 21.1% and 14.2% in the past four years. growth rate.
The blow by the United States has indeed hurt Huawei. Huawei has been tied up all year round, which is quite difficult.
The consumer business is still the largest contributor to Huawei, with revenue of 482.916 billion yuan, accounting for 54.18% of total revenue, but the year-on-year increase is only 3.3%. In the previous year, Huawei’s consumer business grew by 34% year-on-year.
In November last year, Huawei divested its glory.
Constrained by the supply of chips, the shipment of Huawei branded mobile phones has also seen a significant decline.
This part of the business data in 2021 will more fully present Huawei’s “foundation” after losing its glory.
Maybe the data is not good enough. Huawei did not disclose the number of mobile phone shipments in the 2020 annual report as in previous years.
However, according to the data previously released by IDC, Huawei’s smartphone shipments in 2020 were 189 million units, a decrease of 21.5% year-on-year, ranking third in the world, down one position from the previous year, and being overtaken by Apple. In the fourth quarter of 2020, shipments of 32.3 million units fell to fifth.
At the same time, the sales of consumer terminal products including PCs, tablets, smart wearables, etc. have increased, neutralizing some of the effects, and ultimately the entire consumer business maintained a 3.3% increase.
In terms of different regions, China’s revenue increased from 5067.3 in the previous year.300 million yuan increased to 584.91 billion yuan, and the corresponding proportion increased from 59% to 65.62%; the income of several other regions decreased to varying degrees. Among them, the income from the Americas had the highest decline, reaching 24.5%.
The increase in revenue in the Chinese market is mainly due to the peak period of domestic 5G network construction and corporate digital transformation; the decrease in revenue in the American market is mainly due to the fluctuations in the market investment of operators in some countries and the unavailability of the Google mobile service ecosystem. Impact.
After the United States suppressed it, Huawei was forced to retreat, and its dependence on domestic business increased significantly.
However, despite the limited revenue growth, Huawei’s R&D investment in 2020 did not slow down. R&D expenditures of 141.893 billion yuan accounted for 15.9% of revenue, and both indicators set new highs.
At the same time, at the end of 2020, Huawei’s R&D personnel will continue to grow to 105,000, accounting for 53.4% of the company’s total number. Huawei has become an enterprise with more than half of the R&D personnel.
Huawei employees told the city community that the increase in R&D personnel is, on the one hand, to cope with the technological gaps that have emerged after the US sanctions, and on the other hand, Huawei’s multiple businesses have begun to work hard, and the demand for personnel has increased.
Overall, the profit rate of 8.1% for the whole year reached the lowest point in recent years.
In terms of assets, In 2019, Huawei stockpiled a large amount of goods within the extended period of the “temporary license”. At the end of the year, the cost of inventory and other contracts reached 167.39 billion yuan, a year-on-year increase of 73.4%. This value has remained basically stable, which shows that Huawei is continuing to invest in stocking.
In terms of liabilities, at the end of 2020, Huawei’s long-term and short-term loans totaled 141.811 billion yuan, a year-on-year increase of 26.4%. However, short-term borrowings decreased and long-term borrowings increased. The overall borrowing structure has been optimized, and the debt-to-asset ratio has decreased by 3.3 percentage points from the end of the previous year, which is in line with Huawei’s “soundness”temperament.
Unlike these moderate indicators, what best reflects Huawei’s hardship in 2020 is the lowest operating cash flow in seven years, with a total of 35.218 billion yuan for the year, a significant decrease of 61.5% year-on-year.
This means that the cash that Huawei earns through operating activities in 2020 will shrink by more than 60%.
In addition to the continuous investment in cloud business and other research and development, the reason behind it is also the sharp decrease in accounts payable. The latter means that Huawei’s position in the supply chain has undergone subtle changes. The number of accounts payable turnover days has dropped from 91 days in the previous year to 48 days, which may indicate that Huawei is striving for the continuation of some cooperation through shorter accounting periods and spending money to continue life.
2. “Passive back” consumer business
Huawei in 2020 is still in a complex and turbulent environment. Behind the data changes of different businesses is the shift of Huawei’s business focus.
In terms of the mobile phone business, while Huawei is tied to its hands and feet, it is also facing quite strong competitors. The overall market share has dropped sharply, and a large part of the space is occupied by Xiaomi.
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IDC data shows that in the fourth quarter of 2020, Huawei’s smartphone shipments were only 32.3 million units, accounting for only 8.4% of global sales, ranking fifth. Compared with the annual sales of 240 million units in 2019(including glory), the market share of 17.6% and the second place in the world, Huawei’s It can be said that the mobile phone business has shrunk significantly.
More sadly, this trend may continue to develop.