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ZTE doubles full-year profit on an 8 per cent revenue rise

RMB

via Flickr © adkorte (CC BY 2.0)

ZTE is doing quite nicely. The Chinese infrastructure and smartphone firm has announced its preliminary financial results which envisage a 94.2 per cent growth in full-year profit - a growth figure we’re  not used to seeing in the telecoms vendor market since…  a figure we’re not used to seeing in the telecoms vendor market at all.

But there’s a big caveat here: the number relates to profit “attributable to shareholders”, not revenue. The revenue figure has improved gracefully by around 8 per cent to just over RMB 84 billion.  

Profitability, however, has been paper-thin. In the year ended 2013 reported profit (under Chinese accounting rules) was just RMB1.36 billion (about 1.8 per cent) from revenues of RMB75.23 billion. With a squeeze here and tighten there it’s not desperately hard to double reported ‘profits’ in these circumstances.  In fact ZTE says it’s ground out the extra cash by “optimising operations and decreasing its expenses by management of interest costs and foreign exchange,” so no momentous improvement to anything operational has taken place.

That said, there’s no doubt that ZTE is doing nicely and still structuring its finances for continued growth. It says its rising revenue is being powered by continued demand for LTE network systems and smartphones.

ZTE preliminary financial results for the year ended 31 December 2014 (unaudited)

 

Item

Year ended 31 December2014

Year ended 31 December 2013

Change (%)

Operating revenue

RMB 81.24 billion

RMB 75.23 billion

8%

Net profit attributable to shareholders of the listed company

RMB 2.64 billion

RMB 1.36 billion

94.2%

Basic earnings per share

RMB 0.77

RMB 0.39

97.4%

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