ZTE Corp to focus on expansion by networks

PUBLISHED : Thursday, 11 August, 2011, 12:00am
UPDATED : Tuesday, 05 May, 2015, 9:20am


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Telecommunications equipment maker ZTE Corp aims to sharpen its focus on new expansion activities of network operators in the second half after posting a decline in net profit in the six months to June.

Shenzhen-based ZTE, the mainland's second-largest telecommunications gear manufacturer behind Huawei Technologies, yesterday reported a 12.42 per cent decrease in net profit to 768.52 million yuan (HK$931.5 million) from 877.49 million yuan a year earlier.

The fall was due to lower profit margins, a change in product structure and pending software value- added tax refund subsidies.

Revenue rose 21.55 per cent to 37.35 billion yuan from 30.73 billion yuan.

First-quarter turnover from international markets climbed 36.4 per cent year on year to 20.81 billion yuan, which accounted for 55.7 per cent of total revenue.

Domestic turnover grew 6.9 per cent to 16.54 billion yuan, or 44.3 per cent of total sales.

In a filing with the Hong Kong stock exchange, ZTE chairman Hou Weigui said the company took 'an aggressive approach' to gain access and compete effectively in the so-called smart terminals market segment, which includes internet-ready smartphones and data cards attached to laptop computers to access wireless broadband networks.

The company shipped 60 million terminal products, including five million smart devices in the first six months of the year. That marked a 400 per cent year-on-year increase in its smart terminal sales, especially on the mainland, North America, South America and Europe.

The gross profit margin for those products, however, declined to 19.6 per cent from 22.7 per cent a year ago.

Hou said ZTE's second-half focus would be on efforts by the mainland's three nationwide domestic carriers 'to expedite their capital expenditure', while attending to 'mobile broadband [network] construction and smart terminal development' in the international markets.

Shares of ZTE increased 4.96 per cent to close at HK$21.15 in trading yesterday.