China-based equipment vendor ZTE recorded robust profit growth in the first half of 2021, with a double-digit rise in revenue fueled by a sharp increase in its consumer business, while its key carrier division remained flat.
Net profit in H1 surged 134.2 per cent to CNY2.11 billion ($325.7 million); excluding extraordinary items, net profit hit CNY4.08 billion. In a statement, ZTE said efforts to optimise its cost structure led to gross profit margin rising 2.7 percentage points year-on-year to 36.1 per cent.
Operating revenue rose 12.4 per cent to CNY53.07 billion, with domestic sales increasing 13.2 per cent to CNY35.95 billion. International turnover rose 10.8 per cent to CNY17.1 billion, accounting for 32.3 per cent of total revenue (down slightly from H1 2020).
Carriers’ networks revenue was flat year-on-year at CNY35.05 billion, as strong domestic demand was offset by uncertainties outside of China caused by the Covid-19 (coronavirus) pandemic, which the company said posed “considerable pressure and challenge for overseas network investment, 5G progress and network construction in the short term”.
Its consumer business recorded 66.6 per cent growth to CNY12.35 billion, as residential terminal and mobile device revenue rose more than 90 per cent and 40 per cent respectively.
Revenue in its government and corporate business increased 17.7 per cent to CNY5.67 billion, with server and storage products doubling year-on-year in the domestic market.
R&D spending in the six-month period increased 33.5 per cent to CNY8.86 billion, with the expenditure as a percentage of operating revenue rising to 16.7 per cent from 14.1 per cent in the same period in 2020.Subscribe to our daily newsletter Back