84 Huawei Investment & Holding Co., Ltd.
Results of Operations
Financial Performance(CNY Million) 2019 2018 YoY
Revenue 858,833 721,202 19.1%
Gross profit 322,689 278,171 16.0%
– Gross profit margin 37.6% 38.6% (1.0)%
Total operating expenses (244,854) (204,884) 19.5%- as % of revenue 28.5% 28.4% 0.1%
Operating profit 77,835 73,287 6.2% - as % of revenue 9.1% 10.2% (1.1)%
Net finance income 178 253 (29.6)%
Income tax (15,367) (14,301) 7.5%
Net profit 62,656 59,345 5.6%
Revenue in 2019 totaled CNY858,833 million, representing a 19.1% year-on-year increase. Net profit grew by 5.6%
year-on-year to CNY62,656 million. This is attributable to the following factors:■ As the consumer business grew rapidly and contributed a larger share to total revenue in 2019, the company’s
gross profit margin dropped by 1 percentage point from 2018.■ While we increased our investment in future-oriented research and innovation, branding, and sales channel
development, we continued with our management transformation to increase efficiency. As a result, there was a
slight increase in our total operating expenses as a percentage of revenue, up 0.1 percentage points compared
with 2018.■ As interest expenses related to financing activities increased and net finance income decreased sharply, net
finance income contributed less to our net profit.Total operating expenses(CNY Million) 2019 2018 YoY
Research and development expenses 131,659 101,509 29.7%- as % of revenue 15.3% 14.1% 1.2%
Selling and administrative expenses 114,165 105,199 8.5% - as % of revenue 13.3% 14.6% (1.3)%
Other (income)/expenses, net (970) (1,824) (46.8)% - as % of revenue (0.1)% (0.3)% 0.2%
Total operating expenses 244,854 204,884 19.5% - as % of revenue 28.5% 28.4% 0.1%
In 2019, Huawei continued to increase its investment in research and development for the future, such as in 5G,
cloud, artificial intelligence, and smart devices, as well as in its business continuity plan. As a result, the company’s
R&D expenses as a percentage of revenue increased by 1.2 percentage points year-on-year.