ZTE profit rebounds on strong network growth - Mobile World Live

ZTE profit rebounds on strong network growth

30 MAR 2020

ZTE returned to profit in 2019 as double-digit growth in Asia and Africa, and strong gains its network group, offset a decline in revenue in its consumer division.

Net profit of CNY5.15 billion ($726 million) reversed a CNY6.98 billion loss in 2018, when it was hit by a $1 billion penalty imposed by the US, along with operating losses and provisions related to the suspension of its business.

Operating revenue rose 6.1 per cent year-on-year to CNY90.74 billion. The growth was driven by a 16.7 per cent increase revenue in its networks group to CNY66.58 billion, which it credited to strong sales of FDD and 5G equipment.

In its earnings statement, the company said it signed 46 5G commercial contracts globally and was cooperating with more than 70 operators.

Higher margin
The network unit accounted for 73.4 per cent of total sales, up from 66.8 per cent in 2018, boosting the overall gross profit margin by 3.7 percentage points to 35.1 per cent as the unit delivers higher margins than other business groups.

Consumer business sales fell 21.9 per cent to CNY15 billion, while the government and corporate business was flat at CNY9.15 billion.

Domestic sales rose 6.93 per cent to CNY58.2 billion, accounting for 64.2 of total revenue. Turnover increased 30.2 per cent to CNY5.32 in Africa billion and 11 per cent in Asia to CNY13.2 billion, but Europe, Americas and Oceania fell 7.2 per cent to CNY14.02 billion.

R&D expenses totalled CNY12.55 billion, representing 13.8 per cent of operating revenue compared with 12.8 per cent in 2018.

ZTE chairman Li Zixue said it will focus on premium markets to increase its market share, in an effort to sustain revenue growth and improve profitability.

The company plans to introduce up to ten 5G smartphone models worldwide in 2020.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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