Cost control brings ZTE back to black

Chinese infrastructure vendor ZTE said it expects to return to profit for the full year of 2013. The firm announced in a preliminary earnings announcement that it expects to generate a net profit of RMB1.2bn ($198m) for the year ended December 31^st 2013, versus a loss of RMB2.8bn in 2012.

ZTE said the turnaround is attributable to better management over contract profitability and improved control over the execution of low gross margin contracts. This has resulted in improved gross margin on international projects, the firm said. In addition, operating revenue from domestic projects has increased as a percentage of total operating revenue.

ZTE added that it was more cost-efficient in 2013 compared with 2012, with total expenses such as selling and distribution costs, admin expenses and R&D costs significantly lower year-on-year.

The firm stressed that the financial data was arrived at through preliminary calculations made by its finance department. Finalised figures will be published in its 2013 Annual Report.

Earlier this month, ZTE announced that it will split out its handset division and operate it independently to the rest of the business.