The main communication business encounters a downturn! ZTE's revenue and profit both declined last year, with net profit dropping 9.66% year-on-year | Financial Report Insights
ZTE faced revenue pressure last year, with operating income of 121.299 billion yuan, a year-on-year decrease of 2.38%. Profitability also declined, with a net profit attributable to ordinary shareholders of the listed company of 8.425 billion yuan, a year-on-year decrease of 9.66%. The company stated that it will accelerate its transformation towards "connectivity + computing power" in an attempt to expand new market space
The construction of 5G networks has entered a mature stage, with overall investment by operators declining. ZTE's revenue was under pressure last year, and its profitability also declined.
On February 28, ZTE released its 2024 financial report, which showed:
Revenue: Achieved operating income of 121.299 billion yuan, a year-on-year decrease of 2.38%;
Net profit: Net profit attributable to ordinary shareholders of the listed company was 8.425 billion yuan, a year-on-year decrease of 9.66%. The net profit after deducting non-recurring gains and losses fell by 16.49%.
Earnings per share: Basic earnings per share and diluted earnings per share were both 1.76 yuan, down 10.20% from 1.96 yuan in 2023.
The financial report indicates that ZTE's performance in the domestic market is under pressure, with the company's domestic market operating income at 82.006 billion yuan in 2024, a year-on-year decrease of 5.18%. The report pointed out:
As the construction of 5G networks enters a mature stage, the overall investment by operators has declined and undergone structural changes, leading to pressure on the company's revenue. In response to this situation, ZTE is consolidating its market position in wireless and wired products while accelerating its transformation towards "connectivity + computing power," attempting to expand new market space.
Compared to the sluggish domestic market, ZTE's performance in the international market seems to be better, with the company's international market operating income at 39.293 billion yuan last year, a year-on-year increase of 4.04%. However, the gross profit margin dropped significantly by 10.56 percentage points, standing at only 26.91%.
In the face of challenges in traditional communication businesses, ZTE is turning its attention to the "computing power" sector.
The financial report repeatedly mentions keywords such as "intelligent computing," "servers and storage," and "data centers," indicating the company's emphasis on this field. ZTE stated that it has positioned intelligent computing as a long-term strategic main channel and provides comprehensive intelligent computing solutions covering "computing power, network, capabilities, intelligence, applications, and terminals."
In addition, the report also shows that ZTE has a high dependence on major customers. In 2024, the sales amount to the top five customers accounted for 55.72% of the total sales