BEIJING - Chinese telecom giant ZTE Corporation saw its net profits surge 35.87 percent year on year in the first quarter of 2013 as profit margin expanded and expenses dropped, the company said on Friday.

Net profits reached 205 million yuan (33 million US dollars) in the first quarter, bringing the basic earnings per share to 0.06 yuan, ZTE said in a statement.

Business revenues slipped 2.79 percent year on year to 18.09 billion yuan during the period, but the overall gross profit margin improved for the second consecutive quarter and stronger cost controls reduced expenses, said the statement.

Research, sales and management costs fell about 350 million yuan from a year earlier.

However, if such items as investment earnings and non-business revenues were not included in the calculation, statistics showed 615.49 million yuan of losses in the first quarter, compared with 89.16 million yuan of net profits in the same period of last year.

The company said it will continue to improve efficiency in the next quarter, focus on populous markets and cash in on the demand for fourth-generation telecom equipment as well as smartphones and tablets.