Huawei issues UK sales warning due to stringent regulations causing significant sales decline
Huawei UK Faces Decline in Turnover and Profit Amidst Regulatory Restrictions
In a significant shift, Huawei UK has experienced a decline in turnover and profit since 2022, primarily due to ongoing UK government restrictions and limitations on Huawei's involvement in the UK 5G network infrastructure.
The revenue dropped from £229.6 million in 2023 to £188.2 million in 2024, negatively impacting the pre-tax profit. For instance, the pre-tax profit declined from £11.4 million in 2023 to £8.8 million in 2024.
The key reasons behind this decline are the UK government's security concerns and subsequent bans on Huawei equipment in critical 5G network deployments. This restriction has limited Huawei's ability to participate and grow in the UK telecommunications market, constraining its access to contracts and projects, and directly reducing revenue opportunities and profits.
Huawei's efforts moving forward focus on increasing 5G network sales, but these are challenged by regulatory limitations within the UK.
Despite these challenges, Huawei remains optimistic about its future. The directors believe the company is well positioned to continue its sales and profitability in 2025. The company expects revenue in 2025 to fall further from the 2024 level, but sales are expected to continue in Huawei's consumer business, other hardware supplies, and support activities.
In October 2022, the UK government announced that Huawei technology must be removed from the UK's 5G public networks by the end of 2027. In response, Huawei has set its financial targets for 2025 and 2026 Q1, considering risks and opportunities in the telecommunications sector and challenging economic conditions.
The company has issued a warning over its future sales due to ongoing restrictions. To mitigate this, Huawei will focus on the sale of products and services not impacted by UK or US restrictions.
In 2024, Huawei issued a dividend to its Chinese parent company of £8.6 million, down from £25.8 million in 2019. The company is proposing a dividend of approximately £6.6 million for 2024.
Brand awareness remains relatively high among wearables users, with 84% aided recognition in 2022. However, actual usage and loyalty have not translated into significant market growth, which may compound revenue challenges in consumer electronics aside from telecom infrastructure.
The underlying technical, operating, and financial strength of the company and the group are supporting Huawei's business plan, providing a foundation for future growth and profitability.
[1] Source: Huawei's Annual Report 2024 [5] Source: GlobalData Consumer Electronics Intelligence Quarterly Tracker Q2 2022
In light of regulatory restrictions and bans on Huawei equipment in the UK's 5G network infrastructure, the technology industry plays a significant role in Huawei UK's declining turnover and profit, as it hinders the company's growth in the telecommunications market. The financial impact of these constraints on Huawei's business is evident in the reduced pre-tax profit and dividend payments, as demonstrated in the 2024 financial report.
