Q3 revenue growth of 24% driven by strong performance in Europe, the United States and China; ZTE forecast 2014 full-year profit will increase as much as 106%

23 October 2014, Shenzhen, China – ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a publicly-listed global provider of telecommunications equipment, network solutions and mobile devices, posted a 191% increase in third-quarter profit as the company recorded growth in its smartphone and 4G equipment operations.

Net profit attributable to shareholders of the listed company increased to RMB 703 million in the quarter ended 30 September. Third-quarter revenue rose 24% to RMB 21.1 billion, as sales of handsets increased more than 40% from a year earlier. ZTE also posted growth in revenue from Carriers’ Networks, including 4G systems, in addition to Telecommunications Software Systems.

In the first nine months, net profit increased 232% to RMB 1.83 billion, while revenue rose 7.8% to RMB 58.8 billion. ZTE forecast that full-year net profit will be between 2.5 billion to 2.8 billion in 2014, representing year-on-year growth of between 84.1% and 106%.

ZTE experienced strong growth in its operations in Europe, North America and China, as the company benefited from its strategy to focus on key products including 4G LTE, 100G Optical Networks, Gigabit Passive Optical Networks, high-performance network routers and premium smartphones. In the 4G LTE market in China, ZTE consolidated its position as the leading vendor. The robust business performance is indicative of the company’s growing competitiveness.

In the third-quarter, ZTE posted an over-40% increase in revenue from handset terminals, as sales in key markets including China, the United States and Japan recorded growth.

To position the company for future development, ZTE is committed to executing strategic changes that will be transformative to business operations. In an internal memo on 21 August, ZTE President Shi Lirong urged employees to initiate deep-rooted changes in the company’s operations and culture, based on the three core values of “Cool, Green, Open” (CGO). In a move designed to help ZTE deliver increased value to customers amid changes in the global technology market, the company will focus on four key areas: telecommunications equipment, enterprise solutions, mobile devices and emerging technologies, as part of the new M-ICT strategy outlined this year.

Since unveiling the new CGO initiative, ZTE has achieved important breakthroughs. In September, ZTE announced the deployment world’s first large-scale wireless remote charging solution for public transportation, positioning the company as a global leader in the field of wireless charging for vehicles. ZTE’s proprietary 28nm process-based semiconductor is deployed in the company’s wireless router and tablet products. ZTE has also secured online payment licenses in China to position the company for growth in the mobile finance arena.

In the third-quarter, research and spending increased by RMB 927 million, or 11.5% of revenue, as ZTE commits increased resources to realize its new CGO initiative.