China's Huawei Technologies 2014 profit grows 33 percent

[March 31, 2015]  By Yimou Lee

HONG KONG (Reuters) - China's Huawei Technologies Ltd reported a 33 percent rise in its 2014 net profit, as the global adoption of fourth-generation (4G) mobile technology boosted sales for the world's No.2 telecommunications equipment maker.

Global revenue rose 21 percent from a year ago to 288.2 billion yuan ($46.51 billion) in 2014 for Huawei and is expected to jump another 20 percent this year, the Shenzhen-based company said.

Net profit rose to 27.9 billion yuan last year, in line with the firm's own estimates, but operating margins fell to 11.9 percent from 12.2 percent in 2013, the company said at an earnings briefing on Tuesday.

In response to recent questions about its debt financing sources, the firm said it got 78 percent from overseas financial institutions and the rest from Chinese banks.

Total liabilities stood at 209.8 billion yuan, versus total assets of 309.8 billion yuan, it added.

Founded by former Chinese army officer Ren Zhengfei in 1987, Huawei has taken steps in recent years to disclose more details about its finances and technology to counter allegations that its operations are tied closely to the Chinese government.

Questions have also been raised, in Britain and elsewhere, about the potential security implications of allowing the Chinese company access to critical networks.

The company, which has been effectively locked out of the U.S. telecoms market after a U.S. Congressional report labeled it a potential cybersecurity threat, scored a victory in Britain last week when a government-ordered inspection concluded its equipment posed no danger to Britain's national security.

CONSUMER DEVICES BUSINESS REVENUE JUMPS

Huawei's consumer devices business recorded the biggest jump in revenue last year, up 32.6 percent, amid competition from domestic peers Lenovo Group and Xiaomi Inc. In its enterprise division, which builds private networks for companies and organizations, revenue rose 27.3 percent.

The company's carrier business, which competes with Sweden's Ericsson for the top spot in the global market for communications towers and other infrastructure, recorded a 16.4 percent revenue growth in 2014.

Huawei had targeted overall revenue of $70 billion by 2018, which translates as roughly 10 percent annual growth. The firm has said it will invest 14 percent of its global revenues this year into research and development.

The company missed its smartphone sales target last year in a market dominated by Apple Inc and Samsung Electronics Inc.

($1 = 6.1969 Chinese yuan renminbi)

(Additional reporting by Gerry Shih; Editing by Richard Pullin and Himani Sarkar)

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