Huawei to cut dividend payments to employees after projected revenue slump

Chinese telecoms giant Huawei Technologies Co will pay a smaller cash dividend to “shareholding employees” for 2021, after projecting a one third loss in revenues due to US trade sanctions, according to a report by local media China Business News.

The privately-held company, which is 99.25 per cent owned by a trade union controlled by current employees, is expected to pay a 1.58 yuan (25 US cents) per share dividend to each of its 121,269 “shareholding employees”, the newspaper reported on Sunday. Huawei founder Ren Zhengfei holds a 0.75 per cent stake in the company, according to corporate registry information on Tianyancha.

Huawei could end up paying out more than 35 billion yuan in total cash dividends, based upon the outstanding 22.2 billion shares as of December 2018. Ren would be entitled to 260 million yuan (US$40 million) in cash dividends, according to a calculation by the South China Morning Post.

The 1.58 yuan dividend per share for 2021 would be about 15 per cent less than the 1.86 yuan per share distributed in 2020, a reflection of its business woes.

Huawei chairman Guo Ping said last December that the company would see a 28.9 per cent decline in total revenue to 634 billion yuan for 2021, as Washington’s ban on the company acquiring advanced chips crippled its lucrative smartphone business.

Huawei is diversifying into mining technology and other sectors to broaden its revenue streams. 

A key new area is smart electric vehicles, with the goal of helping carmakers better equip their vehicles with intelligent functions such as autopilot, a trend that has picked up amid attempts to commercialise autonomous driving technology.

Huawei employed 197,000 people at the end of 2020, of which 121,269 were shareholders in the company, according to its 2020 annual report released in March 2021. The Shenzhen-based company is likely to publish its 2021 annual report in March this year.

Its shares are not granted freely, but are purchased for a price based on Huawei’s asset value per share from the preceding year, the Post previously reported.

Shares cannot be traded among staff, but can be sold back to the trade union, according to Huawei rules.