ZTE posts 2bn yuan annual loss as US export fine bites
Shares close up 6.07pc in Hong Kong, as uncertainty over violation of trade sanctions lifted. Telecoms giant now predicts 21-31pc improvement in Q1 profit
ZTE Corp has reported its first annual loss since 2012, after China’s largest listed telecommunications equipment supplier set aside money for a record fine to the United States government as settlement for violating trade sanctions against Iran and North Korea.
The company lost 2.36 billion yuan (US$342 million) in 2016, compared with a profit of 3.21 billion yuan in 2015.
In a regulatory filing on Wednesday, ZTE chairman and president Zhao Xianming said the company made a provision for losses of US$892 million in the 12 months ended December 31 related to the penalty it expected to incur from a settlement with the US government.
Shares in the Shenzhen-based company jumped as much as 8.9 per cent to HK$13.28 in Hong Kong, their biggest intraday advance in 19 months, before easing back to close up 6.07 per cent to HK$12.94. Trading in its shares in Shenzhen was halted for the announcement of the settlement.
Excluding that provision for losses, the Shenzhen-based company estimated it would have reported a 19 per cent increase in annual net profit to 3.82 billion yuan, up from 3.21 billion yuan in 2015.
Total revenue last year was basically flat, advancing just 1 per cent to 101.23 billion yuan from 100.19 billion yuan a year earlier.