Lenovo reported a strong improvement in profits for the year to March, driven by cost-cutting and a return to profit at its mobile activities in the second half of the year. Revenues rose 12.5 percent to a record USD 51.0 billion, operating profit tripled to USD 1.2 billion, and the net profit rose to USD 597 million from USD 33 million a year ago. Lenovo proposed a final dividend of HKD 0.218, up from HKD 0.205 a year ago.
In the fourth quarter, revenue growth was slightly lower, at 10 percent to USD 11.7 billion. The gross margin improved 1.7 percent points year-on-year to 16.2 percent, and operating profit more than doubled, to USD 273 million from USD 101 million a year earlier.
Moto in the black
Lenovo said its Mobile Business Group became profitable at the pretax level in the second half of the fiscal year, the first time since it acquired Motorola Mobility, and the unit also returned to revenue growth in the last quarter of the year. The total pretax loss for the year was USD 139 million, narrowing from a loss of USD 603 million in the previous fiscal year.
Annual costs for the unit were slashed from USD 1.5 billion to around USD 1 billion, while the business refocused on core markets. This led to a drop in annual revenue of 11 percent to USD 6.5 billion, but revenues recovered to 15 percent growth in Q4, led by the new Moto G and Motorola One series. The company said the Latin America business remained profitable over the year, and North America became so in H2, after 48 percent growth in shipments there over the full year.
Higher PC ASP
Lenovo's PC business still makes up three-quarters of revenues. It grew by 14 percent year-on-year to record revenue of USD 38.5 billion, and increased pretax profit 34 percent to nearly USD 2.0 billion. The company said it was benefiting from an increased average selling price as it targets more premium segments of the market and also gains market share in Asia and North America.
The company also reduced losses at its Data Center Group, to USD 231 million from USD 425 million the previous year. Revenues rose 37 percent to USD 6.0 billion, the best performance in three years, driven by strong momentum in hyperscale, software-defined infrastructure and high performance computing.
