Hikvision Posts 26% Revenue Growth to $4.6B for 2016

Hikvision 2016 revenues, profits soar as the video surveillance camera company plans to establish new R&D Centre and Research Institute.

CITY OF INDUSTRY, Calif. – Hikvision has released its 2016 financial performance showing revenues of $4.6 billion, up 26% for the China-based surveillance camera maker. The company’s net profits also rose 26% to $1 billion. In the meantime, the company said work is progressing on a new R&D Centre in Montreal and a new Research Institute in Silicon Valley, Calif.

Jeffrey He, president of Hikvision USA and Hikvision Canada, calls the financial performance “concrete results and commitments that our integrator partners can depend on.”

Overall revenue increased 26% percent year-over-year, from $3.6 billion (RMB ¥25.2 billion) in 2015 to $4.6 billion (RMB ¥31.9 billion) in 2016. Gross profit margin was 41%, marking a 1.42% increase over the 2015 gross profit margin of around 40%. Net profits were up about 27% at $1 billion (RMB ¥7.4 billion) in 2016, compared to $841 million (RMB ¥5.8 billion) in 2015.

He says the results are not broken out by region, “however, I can tell you that North America yet again experienced solid growth in 2016. This is a continuing trend for the past several years.”

“Our growth is a direct result of our leading R&D technology innovation capability, our secure products, growth in overseas markets including North America, and our continuous efforts to optimize operating quality and efficiency,” says He. He notes that Hikvision typically reinvests about 7% to 8% of overall revenue into R&D. In 2016, Hikvision invested $348 million (RMB Â¥2.4 billion), or 7.62% of overall revenue, in R&D. The 2016 R&D investment was 41.26% higher than the 2015 investment of $249 million (RMB Â¥1.72 billion).

New R&D Centre, Research Facility

Hikvision currently has five R&D centers in China, but it is opening an R&D Centre in Montreal this year, and plans to launch a Research Institute in the Silicon Valley in the near future.

“Over the past couple of years, we’ve made substantial investments in our regional organizations, and the R&D Centre and the Research Institute are a testament to Hikvision’s continued commitment to the market. The R&D Centre and Research Institute will help us get the most innovative technology talent in the industry, be more localized in our market and to serve our customers even better,” explains He.

The company reports having liquid assets of $1.97 billion. It has short-term loans of $4.6 million (RMB ¥32 million) and the total long-term borrowings of $246 million (RMB ¥1.7 billion) at the end of 2016.

Hikvision’s Annual Report lists “government subsidies” of $216 million (RMB Â¥1.49 billion), but He says that is misleading.

“Some have misrepresented our credit facilities – with Export-Import Bank of China, for example – as government subsidies, which could not be further from the truth. I have clarified this issue many times. It is true that there is a section in the Annual Report [page 172] under non-operating income that translates into English as ‘government subsidies.’ This section has nothing to do with our credit facilities. Even a cursory examination of the section reveals that the amounts listed in this section, are, in fact: standard VAT tax rebates; local government incentives provided to businesses, including foreign-owned businesses, that promote employment and economic development; standard tax rebates for items such as water conservation and other environmental initiatives; and, amortization of deferred revenue to encourage companies to make high tech investments.”

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