Chinese telecom giant ZTE Corporation said Sunday it expects huge net losses in the third quarter due to falling revenues and profit margin, while noting a negative impact of U.S. probes on its business with Iran.
The company forecast 1.9 billion yuan (299.7 million U.S. dollars) to 2 billion yuan of net losses in the third quarter of the year, compared with net profits of 299 million yuan in the same period of 2011 and 245 million yuan in the first half.
Delayed progress in some international projects and low gross profit margins of contracts in Europe and Asia including China reduced revenues and the total profit margin in the third quarter, ZTE said in a statement to the Shenzhen Stock Exchange, where it is listed.
As a result of ongoing probes by U.S. Department of Commerce and Department of Justice on ZTE’s business with Iran, the company’s performance in Iran made a negative impact on the third-quarter results, according to the statement.
China’s Ministry of Commerce (MOC) has called on the United States to fairly resolve the case it brought against ZTE over allegations that the company sold banned U.S. telecom products to Iran.
China has kept normal, open and transparent economic and trade relations with Iran, not violating any UN Security Council resolution, and should not have to endure groundless criticism, MOC spokesman Shen Danyang said in July.
ZTE, together with another leading Chinese telecom firm Huawei, also faced accusations raised by a U.S. Congress committee last week for posing possible threats to U.S. national security.
For the first three quarters of the year, ZTE is expected to report 1.65 billion yuan to 1.75 billion yuan of net losses in total, the company said.