Lenovo more than doubled its net profit in the fiscal first quarter to June, to a record USD 466 million from USD 213 million a year earlier. In addition to continued strong demand in the consumer market for PCs, the company said the commercial market started to recover, supporting 27 percent annual growth in revenues to USD 16.9 billion.
The company's gross margin improved to 16.7 percent from 15.3 percent a year ago, and operating profit was up 70 percent year-on-year to USD 743 million. Operating cash flow rose to USD 448 million from USD 317 million a year earlier, while Lenovo said it increased R&D spending by 40 percent year-on-year.
Lenovo said it saw growth across most regions, led by 54 percent higher sales in China and 39 percent growth in America. Only the rest of Asia posted lower revenues, which the company blamed on fewer educational deals in Japan.
At the main Intelligent Devices division, which includes both computers and mobile phones, revenues rose 28 percent to USD 14.7 billion, and profit increased 43 percent to USD 1.1 billion. PCs accounted for 82 percent of revenue and a focus on premium segments drove a rising average selling price, helping boost margins.
Lenovo said the smartphone business delivered over 60 percent revenue growth year-on year and a record operating margin of almost 5 percent. Motorola regained a top-three spot on the North America market and strengthened its number-2 position in Latin America, the company said.
Looking ahead, Lenovo is focused on growing its high-margin services business. Demand in the PC market is expected to remain at current levels through at least 2025, with a shorter upgrade cycle as personal devices become more central to people's lives, the company said. The group also sees room for growth in the non-PC market driven by the expansion of IoT applications.
