ZTE Forecasts 43% Rise in First-Half Net Profit as 4G LTE Projects Drive Growth

Revenue projected to increase 21.9% to RMB 45.94 billion in first six months as a result of strong FDD-LTE and wireline systems orders, in addition to new Smart City deployments

21 July 2015, Shenzhen, China – ZTE Corporation (0763.HK / 000063.SZ), a major international provider of telecommunications, enterprise and consumer technology solutions for the Mobile Internet, expects the company to report a 43% increase in net profit for the first six months as a result of stronger sales of 4G LTE network systems.

Net profit attributable to holders of ordinary shares in the listed company is projected to be RMB 1.61 billion (US$260 million) in the first six months, according to preliminary results announcement issued by ZTE today. Operating revenue is projected to increase 21.9% to RMB45.94billion in the first half, from a year earlier. First-half operating profit is expected to grow 132%.

In the first half, ZTE increased revenue from sales of FDD-LTE network systems, in addition to wireline switch and access systems, while contract profitability improved. Revenue in the Enterprise and Government ICT Solutions division also posted growth, driven by new Smart City deployments and higher sales to rail operators. Gross profit in the first half increased.

Expenses of the Group for the reporting period as a percentage of operating revenue remained largely unchanged as compared to the same period of the previous year. The increase in research and development costs as a percentage of operating revenue was mainly attributable to the ongoing increase in the Group's R&D investment in products such as LTE, bearer network, SDN and GPON to support long-term development. Meanwhile, selling and distribution costs and administrative expenses as a percentage of operating revenue decreased year-on-year following enhanced cost management by the Group.