The sales figures were issued alongside the company's annual report, which was delayed several weeks after the announcement of US-imposed export restrictions on the company's suppliers for alleged violation of sanctions against Iran. ZTE has since agreed conditions to suspend the restrictions, including a reshuffling of its top management. A month-long trading suspension in its shares will also be lifted.
The annual report otherwise shows total revenues at the company up 23 percent to CNY 100.19 billion, in line with its preliminary report. Net profit rose somewhat less than the early report, up 21.8 percent to CNY 3.21 billion. ZTE said the changes compared to the preliminary report were due to the impact of the export restrictions and resulting changes in revenue recognition. The company noted that it is unable at this point to assess the full financial impact of the restrictions, as the related investigation is still underway by US authorities and could result in criminal and civil liabilities. ZTE said it's actively cooperating with the US to resolve the matter as soon as possible.
The company's annual operating profit still showed a sharp improvement, to CNY 320.5 billion from CNY 60.3 billion in 2014, thanks to a cost-reduction programme and improvements in financing. This also helped operating cash flow nearly triple, to CNY 7.40 billion.
Despite the strong growth in smartphones, ZTE's carrier networks business still accounts for over half its revenue, at CNY 57.22 billion in 2015. Networks revenue grew 30.2 percent last year, driven by Chinese investments in 4G roll-out and fibre expansion. Operating revenue for the government and corporate business rose 18.2 percent to CNY 10.50 billion, and revenue at the consumer business increased 13.4 percent to CNY 32.47 billion. All three divisions reported operating costs growing faster than revenues and lower gross margins compared to 2014. By region, China accounted for just over half revenues, at CNY 53.11 billion, up 30.9 percent from 2014.
ZTE also announced that it's latest board meeting approved the application for a listing of its subsidiary ZTEsoft on the Neeq stock market in China for small companies. The listing is expected to give ZTEsoft access to new means of financing. No new shares will be issued at the initial listing.
