October 20, 2020

Huawei Q1 2020 revenue growth slows amid US ban, COVID-19

Unsurprisingly, Huawei's first-quarter revenue growth slowed due to the US ban and COVID-19 pandemic.

Huawei P40 Pro rear cover full

Huawei has just announced its Q1 2020 revenue, and the company isn’t overly thrilled with the results amid US bans and COVID-19 problems. Interestingly, the company actually announced that it saw a 1.4% year-on-year increase in Q1 revenue, which shows how much growth Huawei expected to earn versus how much it actually generated.

In total, the company generated CNY 182.2 billion ($25.72 billion) in revenue. While seeing a 1.4% increase sounds acceptable, a year ago the company showed a staggering 39% growth, putting the much smaller growth in 2020 into perspective. However, the company’s report also said the results of Q1 2020 were “in line with expectations,” which means Huawei wasn’t expecting the same sort of growth this year.

The profit margin also shrunk slightly, coming in at 7.3%. Last year, Huawei generated a profit margin of just about 8%. While not a huge difference, most companies look to see profit margins increase year-on-year, so it’s understandable why the firm is disappointed in the results. While the margins are solid, Huawei didn’t disclose a dollar amount for its net profit. Perhaps seeing huge losses on the XS Mate could be part of the company’s problem.

Unfortunately, one of the most interesting pieces of data was omitted from the Q1 2020 revenue report, and that’s the number of handsets sold throughout Q1 of 2020.

Both COVID-19 and bans from the US are major reasons for the company seeing lower-than-expected revenue and profits. In May, the US placed Huawei on a blacklist. The government cited security concerns, which caused it to limit sales of US goods to Huawei. That, along with the strain COVID-91 is placing on the world’s economy, is hurting most companies, and Huawei is certainly no exception.

The growth rate has slowed, but this is also a resilient performance in the face of both the entity list and the coronavirus we are facing at this moment.

Victor Zhang, Huawei Vice President

In spite of the issues, Huawei also said that its “business is continuing as usual,” which should mean that company is able to deliver devices at a rate that’s able to keep up with demand in spite of the current state of affairs.

The company donated millions of protective masks to countries across Europe, which some people thought was done with an ulterior motive. Huawei Vice President Victor Zhan shrugged off those claims, though.

Huawei closed out its Q1 2020 revenue report with a brief glimpse into the company’s mindset regarding the pandemic. The release said, “Even though it is impossible to know when the tides of this pandemic will turn, we at Huawei believe that this challenge will be overcome by standing together.”

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