ZTE shares fall 15.8 per cent following Q3 loss forecast

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Manufacturer expects to make a loss of almost £200m to for three month period and announces a series of steps to repair the damage

ZTE’s shares in Hong Kong fell 15.8 per cent today after it warned of a third quarter loss that would wipe out its profit from the first half of this year.

Last night the manufacturer said it expected to report a net loss of Rmb1.9bn-Rmb2bn (£188.7m-£198.6m) for the three month period, compared with a Rmb299.3m (£29.7m) net profit for the same period last year.

It said this performance would lead to a net loss of Rmb1.65bn-Rmb1.75bn (£163.9m-£173.8m for the first nine months of this year, wiping out an interim net profit of Rmb245m (£24.3m).

ZTE said the loss was mainly down to the current global economic and industry trend, the recognition of low-margin contracts in Q3, a delay in some projects of overseas clients and a change in the procurement mode of domestic operations.

In response to these results, ZTE said it will “raise its level of responsiveness to the internal and external environment in order to adjust its strategy in a timely fashion”.

It said it will put profit at the centre of its focus,increase the profitability of contracts and reduce losses on some profitable business. It will also reduce selling costs and research development expenses, close offices that record a loss with limited prospect of a turnaround, consolidate products that offer little development potential, analyse headcount and conduct organisational change.

“The company will allocate more resources to its terminals business in North America and Europe, while proactively pursuing opportunities in the wireless and wired broadband segments including China and Asia Pacific,” it added.

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