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General

Lenovo doubles quarterly profits on cost cuts, strong PC sales

Thursday 15 August 2019 | 09:00 CET | News

Lenovo nearly doubled its operating profit in the fiscal first quarter to June, thanks to improved profitability across all its divisions. Revenues were up 5 percent to USD 12.5 billion, driven by the PC business, and the net profit rose to USD 162 million from USD 77 million a year ago. 

The gross margin increased by 2.7 percent points year-on-year to 16.4 percent, and the operating profit rose 90 percent to USD 343 million. 

The results were led by a strong performance at Lenovo's PC business, which realised a record market share of 25.1 percent in the quarter. Revenues at the division rose 12 percent to USD 9.6 billion, driven by a focus on the commercial and premium market segments, and pretax profit was up 23 percent to USD 524 million. 

The merger of back-office and supply chain for the PC and mobile businesses also helped the latter improve margins. Despite a 9 percent fall in revenues at the mobile phone operations to USD 1.5 billion, pretax profit was up by over USD 100 million from a year ago. Lenovo blamed the drop in mobile revenues on its reduced scale in Europe and said sales remained solid in North and Latin America. 

The data centre group posted revenues down 17 percent to USD 1.4 billion, hurt by overall sluggish demand and inventory buildup in the market. The pretax loss at the division still reduced slightly, to USD 52 million from USD 63 million a year earlier. 

Lenovo said it sees marcoeconomic risks ahead due to the trade tensions, but will continue to focus on gaining market share in the premium segment and managing costs. In the mobile business, the group plans to launch six new models in the current quarter and will continue to focus on key markets to sustain profitable growth.  



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Categories: General
Companies: Lenovo
Countries: World
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