ZTE Report Rising Sales, Declining Profits

ZTE reported 1H2011 revenue of RMB 37.3 billion for the first half of 2011, up 21.5% over the first half of 2010. Total profit was RMB 1.27 billion, down 8.7% compared to the same period last year.


In its domestic Chinese market, ZTE reported domestic business revenue of RMB 16.5 billion, representing a year-on-year growth of 6.9% and accounting for 44.3% of its operating revenue.


ZTE's revenue from international markets increased by 36.4 per cent year-on-year to RMB 20.81 billion, accounting for 55.7 per cent of the company's operating revenue.


ZTE's gross profit margin for the reporting period was 29.76%, down 3.69 percentage points from the 33.45% reported for the same period last year.


Revenues from handset sales as a percentage of its total operating revenue increased from 25.35%
for the same period last year to 30.03%.


ZTE shipped 60 million terminal products, including 35 million smartphones in the first six months of the year. This is a 400% increase year-on-year in smart terminal sales. Consequently, operating revenue for the company's handset products as a percentage of total operating revenue increased to 30.0 per cent from 25.4 per cent in the same period last year. Overall gross profit margin for handset products declined to 19.6% from 22.7% previously.


Looking ahead, ZTE said it expects domestic carriers to increase their CAPEX spending in the second half of the year.
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