Lenovo is stepping up the income of the 9th consecutive quarter, reaching $13.5 billion
- The income of the company showed growth for the ninth consecutive quarter, reaching $13.5 billion
- Income before taxes increased by 45% to $310 million
- Net profit increased 20% to $202 million
- Lenovo continues to maintain leadership in the global PC market with a record level of deliveries ? 17.3 million units, including double-digit growth of the premium segment
- Revenues from software development and services grew by 35% to $883 million
Lenovo Group (HKSE: 992) (ADR: LNVGY) announced that its revenue in the second quarter reached $13.5 billion, showing an increase over the last nine quarters. Compared to the same period last year, income before taxes increased by 45% to $310 million, Net profit increased by 20% yoy and reached $202 million income Distribution between the four regions of the company (Americas, Asia Pacific, China, Europe, Middle East and Africa) continues to show a balance, with a share of over 20% for each zone. Basic earnings per share for the second quarter totaled $1.69 cents (13.23 cents HK$). The Board of Directors of Lenovo announced that the interim dividend per share was 6.3 cents HK$.
«We are pleased that during the quarter we were able to show positive growth and achieve strong financial performance despite a challenging and dynamic market conditions of world trade. This success demonstrates our dedication to innovation, our customers in 180 countries and that the world continues to support us on the way to ensure that all «smart» technologies»? commented on Jan Wantin (Yang Yuanqing), Chairman of the Board of Directors and CEO of Lenovo.
The state of world trade
Although the market is still present trade and geopolitical uncertainty, they do not have significant material impact on the financial performance of the company. Achieve a second quarter emphasize a consistently high level of work Lenovo. Global presence flexible business model, significant production capacity and strong financial results remain the competitive advantages that strengthen the position of market leader. Due to this, Lenovo is moving forward confidently, quickly responds to changes and adapts to complex and dynamic market, while providing sustainable long-term results.
An overview of the business group
Division of Intelligent Devices Group (IDG) has achieved significant results. Group PC and Smart Devices (PCSD), one of the two business units of IDG, reported a $10.7 billion revenue and recorded a margin of 5.7%. Sales in the PC market showed high growth rate and increased by 7.1% compared to the same period last year. This led to a total increase in income PSCD 4.1% year-on-year. Income before tax was $612 million, $97 million more than last year.
In the segment of PC production again exceeded the growth of personal computer market that continues to recover. Lenovo is 24.4% of the global personal computer market, maintaining its leading position. Growth occurred in the rapidly developing categories and award, including: workstations, ultrabooks, devices with powerful graphics and a gaming PC ? they all showed double-digit growth year-on-year. In the future, the group PCSD will continue to increase market share and enhance profitability, focusing on customer needs for innovation.
The second business unit of IDG, Mobile Business Group (MBG), for the fourth consecutive quarter demonstrates the yield of positive index PTI (Profit taking index of profit taking), which grows to $57 million year-on-year. Despite insignificant decrease in revenues (up 5.7% to $1.5 billion), the group continues to focus on inventory management, efficiency, loan portfolio and a thorough cost analysis to increase profit. The division of the company in Latin America continues to increase revenue and profits, and expand market share year-on-year. In North America Lenovo has climbed two steps higher in the industry rating and ranked fourth compared to the previous quarter. In addition, revenue in this region continues to grow faster than the market, increasing profitability. Lenovo plans to continue to invest in the business division of MBG to achieve growth in new and profitable market segments.
Division Data Center Group (DCG) has successfully overcome challenges in the second period and for the ninth consecutive quarter reports reduction in losses year-on-year. The total revenue of the division decreased by 13.8% due to lower prices for key components and a reduction in orders from customers-operators of hyperscale solutions. Income, excluding orders of large customers, increased by almost 13% year-on-year. The office in China reported increased revenue by 47% compared to the same period last year. In addition, it was observed double-digit growth in the direction of the data storage systems, Software Defined Infrastructure (SDI) in the segment of high-performance computing (HPC). This was achieved by expanding the portfolio of data storage systems, advanced proposals of software and hardware ThinkAgile and new victories of the project HPC. We can predict that the division of DCG will grow at the expense of orders of small customers. The company also plans to increase revenue in the areas of SDI and data storage systems, and invest in new infrastructure projects using artificial intelligence technology, Edge (Enhanced Data Rates for GSM Evolution) and Telco (Telecommunications). It is expected that a base of large customers will expand and begin to grow in the second half of this fiscal year.
Income units Software and services approaching $1 billion.
Revenue from software and services grew by 35% year-on-year, reaching nearly $900 million Indicators in the areas of Desktop as a Service (DaaS), service support and delivery of services significantly increased, which positively influenced the increase in the company’s income and diversify their streams. It is expected that income in this area will soon exceed $1 billion per quarter.