ZTE confirms 2016 loss after guilty plea in US court
ZTE, soon after admitting violating US trade sanctions in a Texas court, confirmed it slipped to a net loss of CNY2.36 billion ($343 million) in 2016 related to fines due over the issue.
The China-based equipment vendor released its 2016 annual report today, a day after the US Department of Justice (DoJ) confirmed the company pleaded guilty to conspiring to violate US trade sanctions by illegally shipping items to Iran, obstructing justice and making a materially false statement.
Confirmation of the guilty plea means ZTE is now liable to pay fines of up to $1.2 billion, which it agreed to as part of a settlement deal struck with the US Justice, Commerce and Treasury departments earlier this month. The company is liable to immediately pay the US government $892 million, with a potential further fine of $300 million if it violates the agreement in the next three years.
ZTE’s earnings statement shows provision for the $892 million fine resulted in the net loss for 2016. “Without the provision, ZTE would have posted a net profit of CNY3.83 billion, 19.2 per cent higher than a year earlier,” it stated.
The company posted a profit of CNY3.2 billion in 2015.
Revenue hit CNY101.2 billion, a 1 per cent increase from 2015. It said the results were “bolstered by growth” in the company’s carrier networks and consumer business.
In Q4, the company reported a loss of CNY5.2 billion on revenue of CNY29.6 billion.
The guilty plea comes a year after the US first slapped trade sanctions on the Chinese company over allegations of trade breaches. The sanctions never actually came into force, after being suspended several times following negotiations.
As part of the recent settlement, the company also agreed to cooperate with authorities in any investigations of the company or third parties.
ZTE’s guilty plea concludes a five year investigation by the US, which found the company had signed contracts to ship millions of dollars worth of hardware and software from US technology companies to Iran without licences.
The vendor also admitted to hiding data during the investigation.
“ZTE took several steps to conceal relevant information for the US government. It further took affirmative steps to mislead the US government,” the DoJ stated.
Source: MOBILE WORLD LIVE