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Appeared on: Thursday, May 25, 2017
Lenovo Returns to Profitability

Lenovo Group, the world's largest personal computer maker, on Thursday said it returned to profit in a year when its PC shipments fell at a slower rate than the overall market.

The company's profit reached $535 million in the year to March, reversing a loss of $128 million a year prior. Revenue fell 4 percent to $43 billion.

At Lenovo, annual shipments fell 1 percent versus a market fall of 3 percent, with market share rising 0.4 percentage point to a record 21.4 percent. Revenue in its PC and smart devices unit - which makes up 70 percent of the total - fell 2 percent.

Lennovo's PC and Smart Devices (PCSD) business group, which includes PCs, tablets and smart devices, saw its quarterly sales up 4.9 percent year-over-year to US$6.7 billion. Quarterly shipments grew one percent to 14.4 million, four points better than the overall market.

For the full year ended March 31, 2017, Lenovo's PCSD sales were down 2.3 percent but beating the overall market, at US$30 billion.

Importantly, Lenovo continued to deliver strong results in both the fourth quarter and full year in the hyper-growth categories in this business, such as gaming, detachables, Chromebooks and Millennial PCs (in China).

Lenovo's Mobile Business Group (MBG), which includes Moto and Lenovo-branded smartphones, saw 19.7 percent revenue growth in the fourth fiscal quarter outside of China, with total sales of US$1.7 billion. Fourth quarter smartphone shipments increased 17.4 percent to 11.3 million units outside China.

For the full year ended March 31, 2017, overall sales were down 5.4 percent and pre-tax income margin decreased 1.9 points outside China.

Lenovo's Data Center Group (DCG), which includes servers, storage, software and services, fourth fiscal quarter sales were down 13.7 percent year-over-year, to US$850 million. For the full year, revenue decreased 10.6 percent on total sales of US$4.1 billion.

"Despite market conditions that will remain challenging in the short term, the Group exited the year with stronger organization allowing for sharper customer focus and more compelling product portfolio across all our business," Chairman and Chief Executive Officer Yang Yuanqing said in a filing.

Lenovo chairman and chief executive Yang Yuanqing said that the company's China business reorganization will not affect its mobile business on the mainland.

Yang, speaking after the company reported a return to profit for the year to March, said the company will keep its Lenovo-Motorola dual-brand strategy for it mobile business despite a widening loss.

"We will never phase out Lenovo," Yang said.



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