Revenue falls, but Lenovo Group ‘stable’

Electronics company Lenovo Group reports a stable overall performance for its second quarter with revenue at US$11.2 billion and pre-tax profit of $168 million.

It says its core PC business is strong, retaining its No. 1 market position, while its mobile businesses are making good progress and its data centre business is addressing its challenges.

For the six months to September 30, the group’s unaudited consolidated revenue decreased by 7 per cent, or 5 per cent in constant dollars, year-on-year to $21.287 billion. Revenue from the group’s PC and smart-device business was $14.796 billion, a fall of 8 per cent.

Mobile revenue dropped 10 per cent to $3751 million and data centre revenue eased 4 per cent to $2.168 billion.

In the meantime, the group has completed its new campus in Beijing and started relocating employees. Following a sale and leaseback of two of its office buildings, it has booked disposal gains of $129 million and $206 million in the first and second quarter respectively.

For the six months, the group’s gross profit was $3.142 billion, down 2 per cent, while gross margin increased by 0.7 points to 14.8 per cent helped by its enhanced product portfolio.

Profit before taxation was $373 million, versus the loss before tax of $790 million for the same period last year.

During the six months, the global PC industry continued to decline. However, the group retained its leading position in both PC and PC-plus-tablet markets. PC unit shipments declined 3 per cent to 27.7 million, against a market decline of 4 per cent.

Lenovo’s market share continued to increase. Its worldwide PC market share was 21.5 per cent at the end of the second quarter.

The group’s smartphone business showed particularly strong growth in Asia Pacific, especially in key emerging markets such as India.

China accounted for 28 per cent of the group’s total revenue. The group had a market share of 36.6 per cent during the second quarter, according to preliminary industry estimates. Competition in China smartphone market remained keen.

Asia Pacific accounted for 17 per cent of total revenue. It had a 16.4 per cent share of the PC market, with unit shipments falling by 14 per cent.

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