ZTE announced a 4.05 percent increase in first-half operating revenues compared to a year earlier to CNY 47.76 billion. While the company did not release Q2 figures, the report suggests business was stable in the second quarter, after Q1 sales also rose 4 percent. ZTE reported an increase in its operating margin to 7.0 percent from 6.3 percent a year ago, helped by lower bad-debt provisions. Net profit of CNY 1.77 billion was up 9.33 percent from a year earlier, supported by forex and investment gains, and operating cash flow improved 56.17 percent to CNY 2.35 billion.
The company’s home market China accounted for just over 58 percent of revenues in H1, at CNY 27.8 billion. Chinese revenues rose 14.13 percent year-on-year, helped by the expansion of 4G and fibre networks and demand for ZTE’s smartphones. International markets took 42 percent of revenues and were down 7.35 percent to CNY 19.95 billion. Sales in Europe, the Americas and Africa were lower year-on-year, while sales in the rest of Asia rose slightly.
By business activity, ZTE’s carrier network equipment remained the largest, at CNY 28.7 billion in revenue in H1, up 5.1 percent year-on-year. ZTE reported a largely stable gross margin in network equipment, at 41.4 percent, while operating costs rose in line with revenues. Consumer product revenue rose a slower 2.6 percent to CNY 14.4 billion, led by demand in China and Europe, while the consumer gross margin fell over 3 percent points to 15.1 percent. Enterprise equipment revenue was up 2.5 percent to CNY 4.6 billion and the business also reported a fall in operating costs.