SHANGHAI (Reuters) - China’s second-largest telecom equipment maker, ZTE Corp. (000063.SZ)(0763.HK), warned of a net loss of up to 2.9 billion yuan (294 million pounds) for 2012 due to non-renewed contracts and project delays.
ZTE’s operating income declined 18 percent year-on-year in the fourth quarter due to delays in the extension of system contracts and several international engineering projects, the company said in a preliminary earnings statement on Sunday.
The projected net loss for full-year 2012 is between 2.5 billion and 2.9 billion yuan, equivalent to 0.73 to 0.85 yuan per share. That compares to a net profit of 2.06 billion yuan in 2011.
The firm’s gross profit margin in the fourth quarter fell seven percentage points compared to a year earlier, largely due to low-margin contracts in Africa, South America, Asia and within China, the statement said.
Full-year operating income fell “slightly,” year-on-year in 2012, the company said, without providing a specific figure.
ZTE expects to return to profitability in the first quarter of this year, due in part to its sale of Shenzhen ZTE NetView Technology Co., Ltd., which generated investment income between 820 million and 880 million yuan.
But the company cautioned that its prediction about first-quarter earnings is subject to change based on risk factors including macroeconomic conditions, fierce competition in the telecom sector, and uncertainty about costs.
ZTE’s shares closed on Friday at HK$ 14.76 after losing 46 percent in 2012.
Reporting by Gabriel Wildau; Editing by Louise Heavens and Hans-Juergen Peters