ZTE returned to profit in the first six months of 2019 as it bounded back from a $1 billion penalty imposed last year, reporting solid growth in its carrier business, due in part to growing interest in its 5G gear from around the world.
The company’s net profit in the January to June period jumped 119 per cent year-on-year to CNY1.47 billion ($205 million), while operating revenue increased 13.15 per cent to CNY44.61 billion.
After US authorities fined the company for allegedly making false statements in the aftermath of an earlier action related to the violation of trade sanctions concerning Iran, it reported a net loss of CNY6.98 billion in 2018, compared with a prior-year profit of CNY4.57 billion.
H1 2019 revenue from its domestic market of China increased 6.5 per cent to CNY27.4 billion, representing 61.5 per cent of total operating revenue (down from 65.2 per cent in H1 2018). Its business in Africa more than doubled to CNY2.7 billion, while Asia revenue increased 83 per cent to CNY7.8 billion. Turnover in Europe, Americas and Oceania fell 18.1 per cent to CNY6.66 billion.
The company’s carrier network division accounted for nearly 73 per cent of total revenue (up from 60 per cent a year earlier) after growing 38.2 per cent year-on-year to CNY32.5 billion. Its consumer business suffered a 35.4 per cent decline in revenue to CNY7.42 billion. Consumer device sales made up 16.7 per cent of total revenue compared with 29.2 per cent in H1 2018.
Its government and corporate business increased 6 per cent to CNY4.7 billion.
In a statement, ZTE said its overall gross profit margin of 37.1 per cent was 11 percentage points higher compared with the same period last year, reflecting the increase in revenue from the carrier networks unit which recorded a higher gross profit margin.
In the first half of the year, the company said it signed 25 commercial 5G contracts in China, Europe, Asia Pacific and the Middle East.
Looking ahead, the vendor estimates its profit for the first three quarters of the year will be CNY3.8 billion to CNY4.6 billion, marking a strong jump from its first half performance.
R&D spending for the six-month period increased 28 per cent year-on-year to CNY6.47 billion, or 14.5 per cent of operating revenue, up from 12.8 per cent for the same period in 2018.
The company said it serves more than 160 commercial LTE networks worldwide, with its 4G base station shipments accounting for nearly 20 per cent of the global market.Subscribe to our daily newsletter Back