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ZTE back in profit in the first quarter

China’s ZTE is back in profit in its first quarter, bouncing back from the disaster of last year, when it was hit by $800m in fines, and a temporary bar on buying US components, as a result of trade disputes with the USA.

In Q119, ZTE has reported net profit of RMB863m ($128m), reversing a loss of RMB5.4bn ($800m) a year ago, largely caused by the US fines.

However, the return to profit is likely to be largely related to stiff cutbacks at ZTE, because revenues have not recovered from the US fight, and the temporary suspension of operations last spring, to the same extent. Quarterly revenues have now declined on a year-on-year basis in four consecutive quarters.

They nosedived by 58% in the second quarter of 2018, when business was suspended, but then fell by 14% in the third quarter and 17% in the fourth. In Q119, revenues were still falling – by almost 20% to RMB22.2bn ($3.3bn).

ZTE is forecasting net profit of between RMB1.2bn and RMB1.8bn ($180m-270m) for the first half of 2019, compared with a loss of RMB7.8bn ($1.2bn) during the year-ago period.

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