Lenovo reported revenues for its fiscal fourth quarter up 21 percent year-on-year to USD 11.3 billion, helped by its acquisition of Motorola Mobility and the IBM server business. Organic growth was held back by negative currency effects; without the forex effect, sales would have increased 28 percent. While the gross margin improved to 15.7 percent from 13.3 a year ago, the acquisitions led to a sharp rise in operating costs. As a result, operating profit fell 45 percent to USD 127 million, and net profit dropped 38 percent to USD 100 million. The company still increased its final dividend to HKD 0.205 per share from HKD 0.18 a year ago.
Lenovo said it laid a good base for profitable growth in the past year, reducing the share of PCs in revenue to 63 percent in the last quarter. The PC market saw a seasonal slowdown in the March quarter, with shipments up just 2.7 percent year-on-year to 13.3 million. Over the full year, the company shipped 60 million PCs, maintaining its number-one position in the market.
In the mobile market, Lenovo shipped 18.7 million smartphones in Q4 and a record 76 million over the full year. Motorola contributed over 7.8 million units in the quarter, and Lenovo said the company was on track to return to profit within 4-6 quarters of the acquisition. Outside Lenovo's home market China, where it faces increasing competition and price pressure, smartphone shipments were up over four-fold to 31 million in the year, as the company expanded Lenovo-brand phones to new markets. Lenovo also grew tablet shipments 26 percent last year to 12 million units.
Lenovo also announced a reorganisation effective 01 April, into two rather than four divisions. The PC and enterprise business groups were merged and will focus on enhancing profitability through further integration of the supply chain and R&D. The mobile business group will be the growth engine, with a new focus on mobile internet services and customer experience along with hardware. Lenovo said it plans to set up more points for customer contact after purchase and focus more on personalization and connectivity to networks and cloud services.
