ZTE reported strong results for the first quarter of 2016, despite the backdrop of the company’s well documented spat with the US Department of Commerce.
The company reshuffled its management in the wake of the dispute, which related to claimed breaches of trade controls on the export of US technology to Iran and other countries.
For the quarter to 31 March, it reported a net profit of CNY949.51 million ($146.55 million), up 16 per cent, on operating revenue of CNY21.86 billion, up 4.09 per cent. After extraordinary items, net profit of CNY969.17 million more than doubled year-on-year.
According to Reuters, citing a “person with knowledge of the matter”, the US-related disruption actually had a limited impact on ZTE, because of its “abundant component inventory”. Restrictions have now been eased on a temporary basis.
ZTE attributed the revenue growth to 4G and optical network sales, as well as terminal product in its home market, and smart city and rail transport projects also in China.
It noted its “pre5G/5G work”, including “deep collaborations with SoftBank and China Mobile”. Also highlighted was work in sectors such as SDN/NFV and next-generation IoT, “through strategic collaborations with the mainland’s three biggest operators”.
With regard to its consumer business, the company made little reference to its smartphone performance, other than that it “continued to sharpen focus on the high-end with the flagship Axon and Blade A1 series continuing to gain traction and reputation”. A next-generation Axon phone was promised “in the near future”.
ZTE trumpeted the fact that 13.96 per cent of revenue had been invested in research and development, a “new record”. With the company having been especially active in handset patents, it said that this is “strategically significant for the internationalisation of ZTE’s products, especially in Europe and North America”.