ZTE Corporation has forecasted that net profit will more than triple in the first nine months as the strong momentum in the company’s 4G LTE business is sustained.
Net profit attributable to shareholders of the listed company will be between RMB 1.7 billion and RMB 1.9 billion in the first nine months, an increase of between 208.2% to 244.5% from a year earlier, according to guidance released by the company today. ZTE also reported today that first-half net profit increased 263.9% to RMB 1.13 billion. Six-month basic earnings per share was RMB 0.33, while revenue increased to RMB 37.7 billion.
The latest forecast by ZTE reflected strength in revenue from network contracts and ongoing improvements to contract profitability in the first nine months, supported by continued investments by customers in 4G networks in China. The company expects to post a year-on-year increase in revenue in the first nine months, as ZTE reaps 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.
During the first half of 2014, ZTE reported rapid growth in operating revenue from carriers’ networks in China as the company played a leading role in supporting massive constructions of 4G networks. Gross profit margin improved substantially as the company adhered to its strategy to focus on servicing network contracts with higher profitability. ZTE 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.
