Lenovo Delivers Strong Performance with Highest Quarterly Revenue in Four Years and Record Pre-Tax Income

  • Highest quarterly revenue for four years (since Q3 FY14/15) – US$14
    billion, up 8.5% year-on-year (YOY) and 6th consecutive quarter of YOY
    revenue growth
  • All-time record high PTI of US$350 million – jumped 133% YOY
  • Recorded net income of US$233 million for the fiscal quarter,
    significantly improved from the net loss of US$289 million in the same
    quarter of last year
  • Major milestones hit across all businesses:

    • PC and Smart Devices business revenue record high at US$10.7
      billion, up 11.6% YOY; continues as undisputed, global #1 in PCs
      with record 24.6% market share*
    • Mobile Business Group became profitable worldwide for the first
      time since the Motorola acquisition, with North American volume
      outgrowing the market by a staggering 40 points and China revenue
      quadrupling YOY
    • Data Center Group enjoyed continued hyper growth in Hyperscale and
      Software Defined Infrastructure, and increased its lead as #1 in
      the world’s TOP500 supercomputer rankings

HONG KONG–(BUSINESS WIRE)–Lenovo Group (HKSE: 0992) (Pink Sheets: LNVGY) today announced
results for its third fiscal quarter ended December 31, 2018. Lenovo
posted its highest group revenue in four years of US$14 billion, up 8.5%
YOY (12.8% YOY excluding currency impact). The company reported strong
pre-tax income of US$350 million (up 133% / +US$200 million over the
previous year) – an all-time record for the company as all businesses
continued to report profit improvements.

The Group recorded a net profit of US$233 million for the fiscal
quarter, significantly improved from the net loss of US$289 million in
the same quarter of last year. Basic earnings per share in the third
fiscal quarter was 1.96 US cents or 15.35 HK cents.

“When we set out on our journey of Intelligent Transformation, our goal
was to restore and then accelerate Lenovo’s business momentum, while
providing our customers and partners with the best technologies in smart
IoT, smart infrastructure and smart vertical solutions. We’ve done
exactly that and more – our strength and position as the industry’s most
prolific global technology organization is firmly established. What I’m
most pleased to see is how Lenovo is bucking the current industry trend
– we’re strong, have delivered record-breaking results this quarter and
are only getting stronger”, said Yang Yuanqing, Lenovo Chairman and CEO.

Business Group Overview:

The Intelligent Devices Group (IDG) posted record revenue
and profit; powered by its third straight quarter since inception of
revenue growth – up 6.2% YOY to US$12.4 billion.

  • During the quarter, the PC and Smart Devices (PCSD) business under
    IDG reported US$10.7 billion in revenue, up 11.6% YOY, and
    sequentially extending the Group’s momentum from the previous quarter.
    PC revenue grew 16% YOY, outperforming the market by more than 17
    points with PTI margin also improving by 1 percentage point. Lenovo
    maintained its position as the world’s undisputed leader in PC sales
    with record market share of 24.6%. A focus on high-growth and premium
    segments saw Workstations, Thin and Light devices, and Visuals revenue
    outgrow the market by more than 30 points, Gaming by 16 points and
    Chromebook by over 220 points.
  • The Mobile Business Group (MBG) under IDG posted
    its first worldwide profit since the Motorola acquisition in October
    2014. This notable achievement came from masterful execution on
    Lenovo’s strategy to reduce expenses, streamline the Group’s product
    portfolio and focus on core markets. Notably North America saw a
    breakthrough quarter for the Group with volumes outgrowing the market
    by a staggering 40 points. Additionally, MBG’s focus on other specific
    geographies is also showing significant results: Lenovo retains the #2
    position in Latin America, despite currency fluctuations and supply
    constraints. In China, thanks to a range of new products under the
    Lenovo brand, the Group continued to build on the momentum quadrupling
    revenue and reporting strong growth in PTI margin.

Lenovo’s Data Center Group (DCG) reported its
fifth consecutive quarter of profit growth (PTI margin up 3.6 percentage
points YOY) on a 31% YOY increase in revenue to US$1.6 billion. In fact,
DCG recorded YOY revenue growth in all geographies, highlighted by
triple-digit growth in North America, and double-digit growth in
Asia-Pacific, EMEA and Latin America. The NetApp joint venture, which is
now operational in China, will further strengthen the portfolio and
expand business opportunities. Hyperscale once again served as a
significant contributor with triple-digit revenue growth and Software
Defined Infrastructure (SDI) revenue grew almost 70% YOY. The Group not
only remained #1 on the TOP500 list of supercomputers globally, but also
increased its lead. **

* IDC CY2018 Q4 Worldwide Quarterly Personal Computing Device Tracker
**
Top500 List of Supercomputers, 52nd edition, Nov. 2018 https://www.top500.org/lists/2018/11/
with 140 of the top 500 supercomputers, 56 systems ahead of the nearest
competitor

About Lenovo

Lenovo (HKSE: 992) (ADR: LNVGY) is a US$45 billion Fortune Global 500
company and a global technology leader in driving Intelligent
Transformation through smart devices and infrastructure that create the
best user experience. Lenovo manufactures one of the world’s widest
portfolios of connected products, including smartphones (Motorola),
tablets, PCs (ThinkPad, Yoga, Lenovo Legion) and workstations as well as
AR/VR devices and smart home/office solutions. Lenovo’s data center
solutions (ThinkSystem, ThinkAgile) are creating the capacity and
computing power for the connections that are changing business and
society. Lenovo works to inspire the difference in everyone and build a
smarter future where everyone thrives. Follow us on LinkedIn,
Facebook,
Twitter,
Instagram,
Weibo,
read about the latest news via our StoryHub,
or visit our website at https://www.lenovo.com.

     

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter ended December 31, 2018

(In US$ millions, except per share data)

 
   

Q3 18/19

 

Q3 17/18

 

Y/Y CHG

Revenue   14,035     12,939     8 %
Gross profit   2,050     1,751     17 %
Gross profit margin   14.6 %   13.5 %   1.1 pts
Operating expenses   (1,616 )   (1,547 )   4 %
Expenses-to-revenue ratio   11.5 %   12.0 %   0.4 pts
Operating profit   434     204     112 %
Other non-operating expenses – net   (84 )   (54 )   55 %
Pre-tax income   350     150     133 %
Taxation   (85 )   (425 )   (80 %)
Profit/(loss) for the period   265     (275 )   N/A  
Non-controlling interests   (32 )   (14 )   125 %
Profit/(loss) attributable to equity holders   233     (289 )   N/A  
EPS (US cents)
Basic 1.96 (2.53 ) N/A
Diluted   1.92     (2.53 )   N/A  

Contacts

Hong Kong – Angela Lee, angelalee@lenovo.com,
+852 2516 4810
London – Charlotte West, cwest@lenovo.com,
+44 7825 605720
Zeno GroupLenovoWWcorp@zenogroup.com

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