Huawei posts strong operating profit for 2013, despite turbulent year

Huawei Technologies Co Ltd posted an over 40 percent rise in annual operating profit as the Chinese telecom equipment maker expanded its presence in emerging markets, countering reduced revenue growth hit by accusations of cyber-espionage.

Huawei, the world's No.2 telecom equipment maker, has had a turbulent year in which it was shut out of multi-billion dollar network opportunities in the United States and Australia and drew the scrutiny of British authorities over cyber security issues.

To counteract this, the unlisted company has placed its hopes in developing markets and its business in Europe, where it has made headway building fourth-generation mobile networks.

Huawei, which has repeatedly said it has no spying links with the Chinese government, on Wednesday reported unaudited 2013 operating profit of 28.6 billion yuan to 29.4 billion yuan. That compared with an audited 2012 operating profit of 19.96 billion yuan - an increase of 43.3 percent.

Revenue reached 238 billion yuan to 240 billion yuan, or an increase of 8 percent compared with a target of 10 percent, the company said.

Huawei, which ranks behind Sweden's Ericsson in telecom gear sales, will release audited financial results for last year in the second quarter of this year.

Huawei, founded in 1987, is known for aggressively gaining sales in the telecom equipment sector by edging out rivals such as Cisco Systems Inc , Alcatel-Lucent SA , Nokia Siemens Networks and ZTE Corp.

The company's flagship carrier business, which accounted for almost three quarters of revenue in 2012, sells equipment to telecom operators.

In the U.S., the company is trying to stake a claim to the country's mature smartphone market following its highly politicised forced retreat from network construction, but it will face a tough battle against established competition such as Apple Inc and Samsung Electronics Co Ltd.

Huawei said smartphone shipments reached 52 million units worldwide last year compared with the company's 60 million unit target.

Huawei was the third-largest smartphone maker globally in the third quarter of 2013, according to Strategy Analytics, with a 5.1 percent market share. However, the company is dwarfed by Samsung and Apple, which have a 35.2 percent and 13.4 percent share respectively.

The company's third area of operations - its enterprise segment - builds and sells communications equipment to businesses and institutions.

© Thomson Reuters 2014