Founded in 1987, Huawei is a leading global provider of information and communications

2020
2019
YoY
Net profit
64,649
62,656
3.2%
Adjustment for depreciation, amortization, net foreign  
  exchange losses and non-operating expenses, net
33,116
25,814
28.3%
Cash flow before change in operating assets and liabilities
97,765
88,470
10.5%
Change in operating assets and liabilities
(62,547)
2,914
(2,246.4)%
Cash flow from operating activities
35,218
91,384
(61.5)%
In 2020, Huawei’s cash flow from operating activities decreased by 61.5% YoY to CNY35,218 million due to 
increased investment in areas like cloud and R&D, an increase in depreciation and amortization, and a decline in 
accounts payable. 
Financial Risk Management
In 2020, we closely monitored the changes in our external environment and proactively assessed their impact on 
Huawei using the financial risk management system we have built over the past years. In addition, we continued 
to amend and improve our financial risk management policies and processes to further enhance our ability to 
withstand financial risks and better support our business development.
Liquidity Risk
We have continuously worked to improve our capital structure and short-term liquidity planning, budgeting, and 
forecasting systems to better assess mid-to long-term liquidity needs and short-term funding shortfalls. We have 
implemented prudent financial measures to meet our liquidity needs and guarantee our company’s business 
development, including maintaining a robust capital structure and financial flexibility, keeping a proper level of 
funds, gaining access to adequate and committed credit facilities, creating effective cash plans, and centralizing 
cash management. As of December 31, 2020, our cash and short-term investments amounted to CNY357,366 
million, which shows that we properly managed our liquidity risks.
(CNY Million)
2020
2019
YoY
Cash flow from operating activities
35,218
91,384
(61.5)%
Cash and short-term investments
357,366
371,040
(3.7)%
Short-term and long-term borrowings
141,811
112,162
26.4%
Foreign Exchange Risk
Our presentation currency is CNY, but we have foreign currency exposure related to buying, selling, and financing 
in currencies other than CNY. According to our established foreign exchange risk management policy, material 
foreign exchange exposures are hedged based on a comprehensive analysis of market liquidity and hedging costs. 
We have developed a complete set of foreign exchange management policies, processes, and instructions. These 
include:
■
  Natural hedging: We structure our operations to match currencies between procurement and sales transactions, 
to the greatest extent possible.
■
  Financial hedging: For certain currencies where natural hedging does not fully offset the foreign currency 
position, we hedge through forward foreign exchange transactions.
In countries where local currencies depreciate sharply or that have strict foreign exchange controls, we manage 
foreign exchange exposure using different measures, including exchange rate protection and financial hedging. 
We have also adopted solutions like accelerating customer payment and promptly transferring cash out of these 
countries to minimize risks.

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2020 Annual Report
 
       
79
With other conditions remaining unchanged, exchange rate fluctuations will impact our net profit as follows:
(CNY Million)