ZTE posts 2.4% dip in 2012 revenue, first ever net loss at $460 million

Telecom Lead Asia: ZTE has posted $13.54 billion revenue in 2012, down 2.4 percent and net loss of $460 million.

China’s ZTE Corp, the world’s No.5 telecom equipment maker, posted its first annual net loss, totalling 2.84 billion yuan ($460 million), due to project delays and falling margins in emerging markets.

In 2011, the Shenzhen-based company had reported net profit of 2.06 billion yuan.

Delays in some network contracts and lower sales of feature handsets have impacted ZTE’s 2012 revenue.

Income from some lower-margin contracts in Africa, South America and China in 2012 also resulted in a drop in gross profit margin, ZTE said in a statement.

In China, ZTE’s revenue of 39.6 billion yuan was stable, accounting for 47 percent of total sales.

However, overseas revenue dropped 4.5 percent to 44.7 billion yuan, representing 53 percent of total revenue.

In the network infrastructure division, ZTE posted revenue of 41.6 billion yuan.

In the terminals division, revenue of 25.84 billion yuan was in line with the company’s target.

ZTE recorded revenue of 16.8 billion yuan from sales of software, services and other products.

Faced with pressures in operations in 2012, ZTE increased spending on research and development by 4 percent to 8.83 billion yuan.

ZTE ranked first in international patent applications by the World Intellectual Property Organization in each of the past two years, and was the first Chinese company to reach the Top-10 in patent applications to the European Patent Office.

In TD-LTE, ZTE consolidated its leadership, with deployments in India, the Middle East and Japan.

In the wireline and optical network equipment segment, ZTE leveraged new technology development to maintain business growth, leveraging the opportunities in the rapid development of broadband and mobile internet internationally.

In the terminals division, ZTE continued to record strong growth in sales of smart devices, as the company delivered competitive products, and diversified its distribution channels.

How ZTE performed in 2012

ZTE said the decrease in revenue from carriers’ networks for 2012 reflected mainly the decrease in revenue generated from domestic wireline switch and access products, international CDMA systems equipment and international optical communications systems.

The decrease in revenue from terminals for 2012 reflected mainly the general decrease in revenue generated from GSM handsets in the international markets and data cards.

The increase in revenue from telecom software systems, services and other products for 2012 was mainly driven by the notable growth in revenue from and costs of video and network terminals in the domestic market.

The Group’s overall gross profit margin decreased by 6.36 percentage points as compared to the previous year due to a larger number of low-margin contracts in certain regions recognized for the year.

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