BRIEF: ZTE first quarter profit tumbles on forex swing

Telecoms equipment maker ZTE Corp. (0763.HK; 000063.SZ) announced on Friday its revenue rose 6.1% year-on-year to about 35 billion yuan ($5.12 billion) in the first quarter. But its net profit plunged 46.6% to 1.31 billion yuan, as its net profit excluding non-recurring items also fell 52.2% to about 936 million yuan.

The company cited several factors for the profit plunge. On the financial side, foreign exchange fluctuations led to a net expense of 341 million yuan in the latest quarter, reversing a 340 million yuan net gain a year earlier. Asset impairment losses rose to nearly 239 million yuan, almost doubling year-on-year, mainly due to increased provisions for inventory write-downs and receivables. Other income, including government subsidies, dropped from 805 million yuan in the same period last year to 373 million yuan in the latest quarter.

The company’s operating cash flow during the latest quarter turned to a net outflow of about 1.98 billion yuan, compared with a net inflow of 1.85 billion yuan a year earlier.

ZTE’s shares opened lower on Monday but rebounded, trading at HK$26 by the midday break, up 7.26%.

By Lee Shih Ta

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