ZTE forecasts a swing back into profitability for 2013

ZTE expects to return to profitability as the company released preliminary financial results for 2013.

Full-year net profit is expected to be between RMB 1.2 billion (US$200 million) and RMB 1.5 billion, as ZTE reported a large-scale improvement in profitability in its major operations.

This reflects a reversal from a net loss of RMB 2.84 billion in 2012.

The turnaround came as the company exercised stringent control of expenses, and adopted closer scrutiny of business that offered lower margins. ZTE also strengthened management of cash flow and accounts receivable, resulting in a large increase in operating cash flow.

Sales, administrative, and R&D expenses were reduced from a year earlier.

ZTE has also implemented changes in strategy, operations and corporate organisation in the past two years.

In 2013, ZTE strengthened the company’s execution in major product groups and markets, and provided improved services and support to key customers. In China, ZTE capitalised on the company’s early-mover advantage in the LTE network to consolidate its position in the market.