Expansion causes profits to slip at ZTE for the first half of 2011, despite revenues rising by more than 20 per cent

Chinese handset and infrastructure firm ZTE saw profits slip 12.4 per cent for the first six months of 2011 to £773.6 million, despite recording an increase in revenues of  21.6 per cent to £3.57 billion.

The firm said the fall in profits was due to its expansion strategy, a change in product structure and pending software VAT refund subsidies.

ZTE said it shipped 35 million smartphones during the six months, four times as many as in the same period of 2010, increasing the share of revenue generated by smartphones from 25.4 per cent in the first six months of 2010 to 30 per cent for the first half of 2011.

ZTE’s international revenues increased 36.4 per cent during the six months, and now account for more than 55 per cent of the firm’s total revenue.

The firm said it will “seek to maintain a positive balance between scale and profit” and improve efficency as it goes forward.