China's ZTE Revises 2015 Profit After US Export Curbs

Chinese telecom equipment maker ZTE Corp revised down its 2015 net profit on Wednesday due to export curbs imposed by the US Commerce Department for alleged violations of sanctions against Iran.

Shenzhen-based ZTE said its 2015 net profit rose 22 percent to CNY 3.2 billion ($493.3 million or roughly Rs. 3,277 crores). On January 19, the company reported a preliminary 2015 net profit of CNY 3.8 billion.

ZTE said in a stock exchange filing the reduction was due to a reassessment of future cash inflows arising from related contracts following the US export curbs.

The publication of the results was delayed as ZTE said it needed to assess the impact of the export restrictions which were imposed last month.

The US government has since said it would ease the restrictions until the end of June and could relax them further if ZTE cooperated in "resolving the matter".

ZTE will continue to communicate and cooperate with US authorities to "seek a final solution", the company said.

"The company still cannot fully evaluate the legal liability and potential impact on its earnings and financial situation from the probe," newly-elected chairman and Chief Executive Zhao Xianming wrote in the filing to Shenzhen Stock Exchange.

"The probe is ongoing and may cause criminal and civil liability under the US law," Zhao wrote without elaborating.

In a routine management reshuffle, ZTE on Tuesday replaced three senior executives that the US government alleged were involved in the Iran issue, including the now former president.

ZTE has "solved the crisis for the time being" as some of the company's component suppliers in the United States are resuming their shipments to ZTE after a temporarily halt last month, according to a person with knowledge of the matter, who declined to be identified due to the sensitivity of the matter.

Shares of the company, which have not traded on the Shenzhen or Hong Kong exchanges since March 7, will resume trading in both cities on Thursday.

Revenue in 2015 rose 23 percent to a record CNY 100.1 billion thanks to China's adoption of fourth-generation (4G) mobile technology. ZTE aims to double the figure to CNY 200 billion in 2020, the company told Reuters earlier this year.

© Thomson Reuters 2016