Strong 4G equipment sales push ZTE net profit up for first half of 2014

ZTE is forecasting that its net profit will more than triple in the first nine months due to strong momentum in the company’s 4G LTE business

Strong 4G equipment sales push ZTE net profit up for first half of 2014

ZTE reported today (20 August 2014) that first-half net profit increased 263.9% to RMB 1.13bn (£110.7m), while revenue increased to RMB 37.7bn (£3.69bn). ZTE attributed the continuing growth to strong momentum in its 4G LTE business, particularly in China.

The company also said today that it expects the net profit attributable to shareholders will be between RMB 1.7bn (£166m) and RMB 1.9bn (£186m) in the first nine months, an increase of between 208.2% to 244.5% from a year earlier.

The forecast is based on the continued investments by mobile operators in 4G networks in China and returns on its investment in the development of key strategic products such as network routers and chipsets. The company also expects gains from more effective foreign exchange management.

Gross profit margin improved substantially as the company adhered to its strategy to focus on servicing network contracts with higher profitability. ZTE also posted positive operating cash flow in the first six months, for the first time in the past ten years. Operating revenue from handset terminals in the domestic market fell in the first six months.

ZTE reported operating revenue of RMB 18.44bn (£1.8bn) from the international market; accounting for 48.9% of the Group’s overall operating revenue. In the first six months, the Group reported operating revenue of RMB 21.84bn (£2.1bn) for carriers’ networks.

Operating revenue for handset terminals amounted to RMB 10.41bn (£1bn). Operating revenue for telecommunications software systems, services and other products amounted to RMB 5.46bn (£535m).

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