Lenovo posted a net loss for its fiscal year to March of USD 189 million, versus a profit of USD 535 million a year earlier, hurt by continued losses at its smartphone and data centre businesses and a writedown of tax assets after the US corporate tax reform. Revenues rose 5 percent to USD 45.35 billion, as the PC division returned to growth, while operating profit dropped 42 percent to USD 387 million. The company maintained its dividend at HKD 20.5 cents per share.
The fourth quarter showed a slightly better picture, with revenues improving to 11 percent growth to USD 10.64 billion. The gross margin was up to 14.5 percent, and operating profit rose 36 percent to USD 101 million.
The PC and Smart Device division increased revenues 16 percent in Q4 and 8 percent over the full year to USD 32.38 billion. Lenovo claims it remained the world’s number-one PC and tablet maker, with its market share growing 0.2 points to 15.6 percent globally. The pretax profit margin improved to 5 percent in Q4, as the company focused on high-growth segments such as gaming. Over the full year, pretax profit dropped 2 percent to USD 1.46 billion, mainly due to higher costs from the increased component prices, and the margin was 4.5 percent.
Mobile business revenue fell 6 percent last year to USD 7.241 billion, while the pretax operating loss, excluding one-time charges, narrowed to USD 463 million from USD 566 million the previous year. Lenovo said it "moved with urgency" in Q4 to reshape the business for future growth and to accelerate progress toward profitability. This included the appointment of Sergio Buniac to lead the business outside of China; a realignment of the product portfolio ahead of forthcoming launches; overall channel inventory reduction, and a strategic market review to identify the opportunities for most profitable growth.
In Q4, Latin America remained the strongest area, recording 13 percent year-on-year revenue growth, and North America shipments grew 54 percent year-on-year.
Lenovo said it will focus on reducing costs in the new fiscal year and strengthening mobile profitability in Latin America, North America and Western Europe by simplifying the portfolio, optimizing the cost structure and leveraging shared platforms. The Mobile business group will also be merged with the PC division to form the new 'Intelligent Devices Group'. Lenovo said this will help it focus more on the customer and their full range of computing needs, as well as expand more in services, subscriptions and VR devices.
