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China's telecommunications giant ZTE expects third-quarter profit after 7.8 billion yuan loss

Photos: Baidu

China’s telecommunications giant ZTE Corporation said on Thursday that it expects to return to profit in the third quarter after recording its worst-ever first-half net loss.

ZTE expects to post a net profit of between 24.2 million yuan and 1 billion yuan in the three months to September 30, it said in a filing to the Shenzhen Stock Exchange.

That compares to a net profit of 1.6 billion yuan a year earlier and a net loss of 7.8 billion yuan in the first half of 2018.

The company’s new executives told shareholders on Tuesday that production had returned to normal and orders are in line with those of July and August last year.

ZTE was blocked from buying vital components from American companies after the US found it violated trade bans with Iran and North Korea.

The ban, which was imposed in April, caused ZTE to cease almost all of its operations.

Under pressure from Beijing, the Trump administration struck a new deal with the firm in June to end the ban in exchange for an additional fine and a drastic management overhaul.

ZTE, along with its bigger Chinese rival Huawei, has been facing pressure from several countries which see the companies as a national security threat.

The US lawmakers fear that Huawei and ZTE could provide a backdoor for the Chinese government to spy on Americans. The Pentagon has already acted on such concerns, barring ZTE and Huawei products from being sold on US military bases.

Last week, Australia said that it would ban Chinese telecommunications firms that could be pressured into helping the Chinese government from its 5G technology push without naming the two companies.

The Japanese government is considering a 5G ban on Huawei and ZTE communications equipment on security grounds.

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