China-based ZTE posted a 65 per cent decrease in profit in Q3 compared with the comparable 2017 period, as it continued to feel the effects of a shortlived US trade embargo.

Net profit attributable to shareholders of CNY564 million ($81.3 million) was down from CNY1.6 billion in Q3 2017, while revenue dropped 14.3 per cent to CNY19.3 billion.

Although this is in line with its prediction in August that it would return to profit in Q3 after a loss in Q2 (albeit at a lower level than in 2017) the company still expects to post a loss of up to CNY7.2 billion for the full year.

In a preliminary full year forecast, the vendor said: “The substantial decrease in results for the period from January to December 2018 compared to the same period last year was mainly attributable to the $1 billion penalty” imposed by the US government, along with “operating losses and provision for losses resulting from the suspension of the major operating activities of the company” as a result of the ban.

ZTE was forced to suspend its operations shortly after a US government order in April which banned US companies from selling equipment to the vendor.

The company reached a settlement in July for it to resume operations. ZTE agreed to overhaul its board and management as part of the settlement, and pay a fine of up to $1.4 billion.

In a statement on Q3 earnings, ZTE noted its major businesses are rapidly recovering, with the resumption of “normal operations in R&D, production and logistics.” During the quarter, “the company strengthened its cost control, and reduced its sales and management expenses on a year-on-year basis,” it added.

Technology progress
ZTE said it “has further deepened its 5G cooperation with operators so that its 5G products and solutions can well match the global commercialisation schedule.”

It said it wants to strengthen its core technology innovation, and invest in new 5G technology research and product development.