ZTE 1H profit rises 21% on international sales growth

Chinese equipment vendor saw Africa revenues surge 107% on year, as group sales rose 30% to hit $2.88 billion.

ZTE announced Wednesday its first half net profit surged 21.21% on year to CNY557.37 million ($81.3 million) from CNY459.84 million ($67.1 million) a year earlier, following robust growth from its international operations.
In the first six months of 2008 the Chinese equipment maker saw group revenue increase by 29.52% from 2007 to CNY19.73 billion ($2.88 billion) from CNY15.23 billion ($2.22 billion).
The improvement was spurred by its international operations, which saw sales growth of 58.93% to CNY12.67 billion ($1.85 billion) from CNY7.97 billion ($1.16 billion) in 2007.
Of particular note is ZTE's African revenues, which rocketed 107.24% during the first half of the year to CNY3.18 billion ($464.14 million).
"The group continued to report stable business development in the first six months of 2008 as it maintained extensive yet in-depth cooperation with domestic as well as international mainstream carriers," said a statement from ZTE's board of directors.
"Competition in global telecommunications continued to intensify during the first six months of 2008, as top-flight international carriers and equipment makers sought to capture new market shares in their respective domains," commented the vendor.
Conversely the vendor saw domestic sales decline slightly to CNY7.06 billion from CNY9 billion a year ago.
ZTE said the restructuring of the country's telecoms industry has presented fresh challenges as well as opportunities.
"Meanwhile, the trend of mobile communications expanding rapidly at the expense of fixed-line business continued," it said.
Citing statistics from China's Ministry of Industry and Information Technology, ZTE said the number of fixed-line users declined by 9.32 million to 356.32 million by the end of June 2008.
However, the number of mobile users in the country has risen to 600.76 million in the first half, up 53.5 million from the end of 2007.
Looking forward to the second half, ZTE said it expects "a clearer picture of competition among domestic telecommunications carriers" to emerge.
Still, the Chinese equipment maker said that while it expects its international operations to maintain good momentum, it warned that economic uncertainty could leave it vulnerable to foreign exchange rate changes.
"The expansion of the group's international business demands higher risk aversion abilities to cope with issues arising from economic, political and legal differences in various countries," added ZTE.