Huawei Masters The Great Vanishing Act As UK Sales Evaporate

Huawei’s latest financial results for UK operations bear the claw marks of devastating multi-year sanctions levied against it by the US government and the British administration’s efforts to expunge the Chinese vendor’s kit from local 5G networks.

All of these actions to clip the wings of Huawei - one of the major success stories of a company that broke into the West - is ostensibly due to fears about the manufacturer's ability to spy on businesses and citizens on behalf of the Chinese government, and handover requested data to the Middle Kingdom's Communist Party when demanded.

The process to unpick Huawei began under former US President Donald Trump in 2019 when Huawei was put on the entity list, and spread to other nations that were under pressure to treat the company like a bogeyman and cut all ties, affects of which are all too apparent in its UK profit and loss accounts.

According to Companies House, Huawei Technologies UK reported a turnover of £359.1 million for the year ended December 2022, down 25.3 percent on the prior year - this is a far cry from the peak of £1.28 billion in 2018.

The decline was “primarily due to anticipated restrictions upon operators’s use of Huawei equipment” that UK government outlined in November 2020, and was subsequently cast into stone in October last year when operators were told they must replace all Huawei networking gear with another vendor by 2027.

The “restriction upon the company’s use of Google Mobile Services pursuant to requirements under the US Export Administration Regulations, which restrict the integration of GMS with the company’s smartphones” was another reason for falling sales.

Huawei was briefly became the world’s largest smartphone maker in 2020, but without the latest Android OS integrated demand for its handsets ultimately diminished.

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In the UK, Huawei closed its enterprise tech business in 2020, but still sells servers and storage to mainland Europe customers.

Administration expenses in the year were down by more than £21.3 million to £104.7 million “as a result of a reduction in employee numbers from 486 to 351”, the accounts state. As such, operating profit before interest and tax only fell one percent rot $18.9 million.

Looking ahead, Huawei says in the account it will “focus on the sale of products” that aren’t impacted by the networking directive in Britain or the US Entity Listing.

“Although the business scale is expected to decline as a result of the external environment, the directors believe the company is well positioned to continue sales and profitability in 2023.” ®