ZTE’s H1 results for 2022 painted a rosy picture, with the Chinese vendor’s operating revenue up 12.7% year-on-year alongside a 12% increase to its net profit.
For the six months ending 30th June 2022, ZTE achieved operating revenue of RMB 59.82 billion, while net profit attributable to holders of ordinary shares of the listed company reached RMB 4.57 billion. Net profit after extraordinary items attributable to holders of ordinary shares of the listed company amounted to RMB 3.73 billion, representing a year-on-year increase of 65.8%.
Despite the challenging global environment, during H1 2022 ZTE was able to ensure the security and stability of its own supply chain as well as continually improve its operational quality and efficiency by leveraging its advantages as an ultimate cloud company, its rich experience in digital transformation, mature business continuity system, and its own self-developed cloud platform that can support tens of thousands of people across the globe to work online.
ZTE has strengthened its end-to-end R&D investment and innovations, spending RMB 10.15 billion – 17.0% of its total operating revenue – on R&D during the first half of 2022. During this period, ZTE’s operating revenue in both domestic and international markets and its three major businesses (carriers’ networks, government and enterprise, and consumer business) all achieved double-digit increases year on year. Domestic operating revenue rose 12.9% to RMB 40.60 billion, accounting for 67.9% of total operating revenue, while international operating revenue was up 12.3% to RMB 19.22 billion, or 32.1% of the total.
In terms of carriers’ networks, ZTE achieved operating revenue of RMB 38.72 billion yuan, an increase of 10.5% year-on-year. In the operators’ traditional network market, ZTE proactively participated in global 5G construction including 5G networks, Gigabit fibre networks and 5G transport networks.
To date, ZTE has entered into 5G cooperation with over 110 operators across the globe, covering major markets including Europe, Asia Pacific and the Middle East. Meanwhile, the company has actively seized the opportunity of domestic operators’ cloud-network transformation, and deeply integrated its own capabilities with their requirements while providing its products and solutions. ZTE has secured the domestic operators’ centralised procurements for multiple years.
In terms of government and corporate business, ZTE’s operating revenue increased by 18.3% year on year to RMB 6.71 billion during H1 2022. Focusing on the internet, finance, electric power, transportation, government affairs and the industry, and relying on its « Precision Cloud Network » and « Digital Nebula », the company has cultivated the digital transformation of the industry, promoted the integration of 5G and industry, and fully participated in major projects such as the east-data-west-computing project in China. In addition, ZTE’s core products and solutions such as server and storage, data centre, enterprise network, video conference, cloud computer and distributed database were widely applied in the government and corporate markets, gradually forming a cloud network ecosystem.
In its consumer business, ZTE accrued revenue of RMB 14.39 billion, a year-on-year increase of 16.5% in the first half of 2022. During the period, ZTE, while consolidating the businesses in the first curve represented by wireless and wired products, has been rapidly expanding its businesses in the second curve, including server and storage products, terminals, 5G industry applications, automotive electronics, and digital energy. In H1, the company has achieved around 40% increase year on year in terms of the operating revenue from its second curve business.
In keeping with its ethos of driving the digital economy, ZTE will continue promoting its own digital transformation, staying committed to building a highly resilient organization and implementing the ‘dual-carbon’ strategy to achieve sustainable development. In addition, the company will actively strengthen cooperation with its customers, industries and ecological partners to jointly advance the development of the global digital economy.
There was further good news for ZTE following the announcement that the vendor was officially named to the Fortune China ESG Influential Listing 2022, highlighting its continued performance and efforts in the field of environment, society and corporate governance.
This was the first year in which Fortune release the China ESG Influential Listing in a bid to recognise the companies shouldering environmental, social and corporate governance responsibilities while creating wealth and leading the global drive towards security and prosperity.
As a member of the UN Global Compact and Global Enabling Sustainability Initiative (GeSI), ZTE has released a sustainability report to the public for 14 consecutive years since 2009. In 2021, both of ZTE’s A shares and H shares have been included in the FTSE4Good Index Series.
To face the challenges of low-carbon transformation, ZTE is pushing a green transition to digital economy, promoting greener operations, supply chain, and digital infrastructure, as well as facilitating the sustainable development of operators and verticals by empowering the green development of industries.
ZTE has obtained more than 500 green innovation patents. By using self-developed high-performance chips and intelligent operation and maintenance tools, it has continuously reduced the energy consumption of network equipment. Compared with currently available solutions, ZTE’s PowerPilot solution can save double the amount of energy. Working with 500+ partners, ZTE has carried out extensive innovative practices in 15 industries, and has continued to explore innovative and green 5G applications worldwide. Through practising green operations, ZTE’s goal is to realize carbon peak carbon neutrality ahead of 2030 and before 2060, respectively.
While pursuing business development, ZTE also takes an active part in public welfare activities. ZTE focuses on educational development, medical assistance, vulnerable population assistance, rural vitalization, and environmental protection, and ensures that all public welfare projects effectively respond to recipients’ needs and achieve expected social benefits. In 2021, ZTE Foundation organized 220 public welfare activities, benefiting a total of 12,000 people.
As for internal control and corporate governance, by using digital tools, ZTE has established a relatively complete system for risk management and internal control, and constantly improved the Business Continuity Management (BCM) system. Meanwhile, upholding compliance and integrity in operations, ZTE has incorporated compliance requirements into the company’s business processes, thereby building a best-in-class compliance management system that is aligned with the company’s business practices. In this way, the company strives to achieve sustainable development together with its customers, suppliers, and other business partners around the world.
In the future, ZTE will continue to integrate ESG (environmental, social and corporate governance) into its daily operations, to further make greater contributions to the global sustainable development.
This Industry Viewpoint was authored by Pravin S. Bhandarkar, Founder and CEO, RtBrick