ZTE confirmed a return to net profit in the first quarter, at CNY 863 million compared to a loss of CNY 5.4 billion a year earlier. The result was at the low end of its outlook of CNY 0.8-1.2 billion, and ZTE said it expects the result to reach a profit of CNY 1.2-1.8 billion over the first half of 2019, versus a loss of CNY 7.8 billion a year earlier.
Revenues in the first quarter totaled CNY 22.02 billion, down 19.3 percent from a year earlier. ZTE did not provide a detailed breakdown of revenues, but said it did experience lower consumer revenue in the period, which had a negative impact on its gross margin. This is likely due to the sharp slowdown in the Chinese smartphone market.
The company said it continued to focus on optimising costs, while still investing in core areas such as 5G. R&D spending for the three months totaled CNY 3.09 billion, or 13.9 percent of revenue, an increase of 4.1 percent points from a year earlier.
