ZTE half-year profit drops 12%

Chinese vendor ZTE has announced that its first half profit has fallen 12.4 per cent year on year, to RMB768.5m ($119.7m). The firm attributed the drop in profit to its “market share expansion strategy, a change in product structure and pending software VAT refund subsidies.” ZTE added that its operating revenue increased 21.6 per cent to RMB37.35bn, with revenues from international markets increasing by 36.4 per cent year on year to RMB20.81bn, accounting for 55.7 per cent of overall operating revenue.

The firm said that it increased revenues from wireless infrastructure contracts during the six months to the end of June this year, and claimed a “leading position” in fixed product areas including PSTN, FTTX, MASN and DSLAM.

But it is the handset market where ZTE now appears to be making its most aggressive push, describing the smartphone market as “key” to its ongoing success. ZTE shipped 60 million handsets, 35 million of which were smartphones, during the period, an increase of 400 per cent year on year. Operating revenue for the handset business grew to 30 per cent of overall operating revenue, up from 25.4 per cent for the same period in 2010. However, gross profit margin for the handset unit declined from 22.7 per cent to 19.6 per cent.

Recently ZTE held a press conference in London, outlining its plan to shift its handset strategy away from white label manufacture towards an own-brand play.