ZTE boosts 1H profit 26.6%

Dylan Bushell-Embling
22 Aug 2013

ZTE expects to swing back to a profit for the first nine months of the year, based on its finalized first-half results.

The company yesterday reported a 26.6% increase in 1H net profit to 310 million yuan ($50.6 million).

Profit growth for the quarter was higher than the 23.5% calculated during the company's preliminary estimate in July. But 1H revenue shrank 11.9% to 37.58 billion yuan, compared to a projected 11.6% decline.

ZTE now expects a profit for the first nine months of 2013 of between 500 million yuan and 750 million yuan, from a loss of 1.7 billion yuan a year earlier. ZTE is attributing its anticipated turnaround to improved gross profit margins and cost controls.

Large scale deployment of 4G networks, particularly in China, will also mark the start of a new wireless infrastructure investment cycle for the telecom industry, the vendor is projecting.

Domestic business accounted for 50.1% of ZTE's overall operating revenue for 1H13, or 18.82 billion yuan, thanks to 4G rollout projects and the Broadband China infrastructure plan.

Broken down by product category, the company earned operating revenue of 19.05 billion yuan for carrier network gear, 12.46 billion for terminals including smart devices, and 6.06 billion for telecom software systems and services.

Revenue from this last category fell 14.75%, in a result ZTE blamed on a decline in operating revenue from service products.

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