ZTE said it expects its first-quarter net profit to more than double year-on-year, to an estimated CNY 1.8-2.4 billion. The increase is driven by continued revenue growth and improving gross margins and profitability, as well as a profit of CNY 774 million on the sale of its 90 percent stake in Caltta Technologies, its trunking subsidiary, to E-Town Semiconductor.
The figures were announced alongside publication of ZTE's annual report. This confirmed annual revenues up 11.8 percent to CNY 101.45 billion and net profit down 17.3 percent to CNY 4.26 billion. The company will pay a dividend of CNY 2 per 10 shares.
Revenues last year were up 16.9 percent in China to CNY 68.05 billion and rose 2.7 percent in the rest of the world to CNY 33.40 billion. ZTE said it improved the gross margin in international markets by 4.9 percentage points to 37.2 percent, the highest level in the last decade.
All its three business lines reported revenue growth. Operator networks grew 11.2 percent to CNY 74.02 billion, government and enterprise services was up 23.1 percent to CNY 11.27 billion, and the consumer business increased 7.8 percent to CNY 16.16 billion.
Operating cash flow rose 37.4 percent to CNY 10.23 billion in 2020, a new record for the company. The gearing ratio meanwhile dropped from 73.1 percent at the end of 2019 to 69.4 percent at the end of 2020.
ZTE said it also spent CNY 14.8 billion on R&D last year, a 17.9 percent increase from 2020 and equal to 14.6 percent of its revenue.
