ZTE Reports H1

Net profit down 12.4% year-on-year at Chinese giant

August 10, 2011

2 Min Read

SHENZHEN, China -- ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a publicly listed global provider of telecommunications equipment and network solutions, today announced a 21.6 percent increase in operating revenue to RMB 37.35 billion in the six months ending June 30, 2011.

In the first half of 2011, the company‘s net profit was RMB 768.52 million, a decrease of 12.4 percent compared with to same period last year. The fall in profit is due to ZTE’s market share expansion strategy, a change in product structure and pending software VAT refund subsidies.

ZTE’s revenue from international markets increased by 36.4 percent year-on-year to RMB 20.81 million, accounting for 55.7 percent of the company’s operating revenue.

ZTE’s wireless products contract revenue increased substantially in the interim period. The company also achieved a leading position in key wireline product fields such as PTN, FTTX, MASN and DSLAM.

ZTE adopted an aggressive approach as part of a critical stage of gaining access to the key smart terminal market. The company shipped 60 million terminal products, including 35 million smartphones in the first six months of the year. This is a 400 percent increase year-on-year in smart terminal sales. Consequently, operating revenue for the company’s handset products as a percentage of total operating revenue increased to 30 percent from 25.4 percent in the same period last year. Overall gross profit margin for handset products declined to 19.6 percent from 22.7 percent. In addition, the company also has invested strategically in telecommunications services, such as cloud computing and the Internet of Things. ZTE also set up an internal venture capital fund to seek market growth opportunities.

Looking ahead, ZTE will leverage the opportunity brought by domestic investment, global broadband network construction and wireless network upgrades, and will seek to maintain a positive balance between scale and profit. This will be accomplished with the fundamental aim of sustaining stable growth in business scale. The company will also improve its operating efficiency and strive to contain costs.

ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763)

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