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ZTE Posts $206 Million Half-Year Profit in Turnaround Bid

By Qu Hui and Han Wei / Aug 28, 2019 02:38 AM / Business & Tech

ZTE Corp., China’s second-largest telecom equipment maker, swung to a profit in the first half, strengthening the prospect of a turnaround this year from a crippling U.S. trade ban.

ZTE, the smaller rival of China’s Huawei Technologies, posted 1.47 billion yuan ($206 million) of net profit for the first half, compared with a 7.8 billion yuan net loss in the same period last year, according to the company’s financial report released Tuesday.

First-half revenue rose 13.1% to 44.6 billion yuan on the back of expanding network business for telecom carriers and government customers, ZTE said.

ZTE was hit with a business ban by the U.S. in April 2018 for violating the country’s sanctions against Iran. The ban, which stopped ZTE’s American suppliers from doing business with it, crippled the Chinese company for several months until it reached a settlement by paying $1.4 billion of U.S. fines.

The company reported 608 million yuan of net profit in the second quarter ended June 30, the second consecutive quarter of positive financial results.

Net profit for the nine months ended Sept. 30 will range from 3.8 billion yuan to 4.6 billion yuan, the company projected. ZTE said it expected higher profit for the third quarter due to income from a land deal with China Vanke inked last month.

Although ZTE is gradually getting back on its feet, the U.S. ban still caused damage to its overseas business development. In the first half, the company reported 6.66 billion yuan of revenue from Europe, America and Oceania, down 18% from the same period last year and 44.5% from 2017.

ZTE said the next-generation 5G wireless network will be its next strategic focus. The company said in June that it secured 25 contracts globally to develop 5G commercial networks.

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