Revenue inches up 1% on growth at carrier networks, consumer businesses.
As expected, ZTE on Thursday reported a full-year net loss following the $1.19 billion (€1.13 billion) fine imposed by U.S. authorities after it illegally shipped network equipment to Iran and North Korea.
The Chinese kit maker reported a net loss of 2.36 billion yuan (€323.36 million), compared to a year-earlier profit of CNY3.21 billion in 2015. ZTE recorded a charge of $892 million (CNY6.14 billion) in 2016 related to the U.S. fine.
"Excluding the effect of the aforesaid provision for losses, the company would have reported net profit attributable to holders of ordinary shares of the listed company of CNY3.83 billion, representing a year-on-year increase of 19.2%," ZTE said, in a statement.
Earlier this month, ZTE agreed to pay fines totalling $1.19 billion after a probe by the U.S. found it violated export controls preventing the sale of American technology to Iran, and then lied to investigators and destroyed evidence to cover its tracks. It was also found to have made 283 shipments of controlled products to North Korea, fully aware that in doing so it was violating export rules.
ZTE warned at the time that the fine would cause it to fall into the red.
Back to the financials, and ZTE’s full-year revenue increased by 1.04% on 2015, coming in at CNY101.23 billion, driven by growth at the carrier networks and consumer businesses. Operating profit jumped to CNY1.17 billion from CNY320.5 billion.
ZTE’s carrier networks business grew revenue by 2.9% to CNY58.88 billion, while the consumer business grew revenue by 3.02% to CNY33.45 billion.
On a geographic basis, domestic revenue surged 10.25% to CNY58.55 billion. However, Asia, excluding China, saw revenue fall 1.73%; revenue in Africa was down 17.6%; and in Europe, the Americas and Oceana, revenue fell 11.52%.