ZTE to boost 5G, cybersecurity initiatives after posting a record US$1 billion annual loss in 2018
- The telecoms equipment giant expects to turn its fortunes around with a first-quarter net profit of up to US$179 million
ZTE Corp, China’s second largest telecommunications equipment manufacturer, predicted a turnaround of its business this year, with a projected net profit of between 800 million yuan and 1.2 billion yuan (US$119 million and US$179 million) this first quarter, after reporting a record annual loss of 6.98 billion yuan (US$1.04 billion) in 2018.
Shenzhen-based ZTE mainly attributed its biggest annual loss to the US$1 billion penalty the company paid to the US government last year as settlement for breaching the terms of an earlier deal on trade sanctions violations.
That reported loss was slightly lower than its earlier forecast in August, when it projected up to a 7.2 billion yuan loss for 2018, compared with a net profit of 4.57 billion yuan in 2017.
The company said its total revenue last year of 85.5 billion yuan was within the estimated range disclosed in its preliminary announcement of the 2018 financial results, according to a statement it released on Wednesday.
ZTE in June agreed to pay an additional US$1 billion in fines to the US Department of Commerce and put US$400 million as surety as part of its settlement for violating US prohibitions against selling equipment to Iran. The agreement also required the company to replace its board and terminate all executives ranked above senior vice-president as well as anyone involved in the Iran violations.
ZTE, which ceased major operating activities for nearly four months from April last year, saw its share price fall to a 52-week low of HK$9.56 in June and rebounded to a high of HK$27.05 in March this year. The company’s shares closed unchanged at HK$21.90 on Wednesday, ahead of its financial results announcement.
