Lenovo reported revenues down 6 percent year-on-year in its fiscal first quarter to June to USD 10.1 billion, hurt by the slowdown in the PC and smartphone markets. Gross profit fell 7 percent to USD 1.5 billion, giving a margin of 15.3 percent, while net profit increased 64 percent to USD 173 million, thanks to cuts to operating costs.
The PC business recorded sales down 7 percent to USD 7 billion, as unit sales dropped 2.3 percent to 13.2 million. Lenovo said it still outperformed the market, which contracted over 4 percent, and improved its market share in all regions except EMEA. The pretax profit rose 2.4 percent to USD 370 million.
The mobile business remained in the red, with a pretax loss of USD 206 million, as sales fell 6 percent to USD 1.7 billion. Lenovo said mobile sales were nearly flat at constant exchange rates, as a higher average selling price offset reduced volumes. The company plans to increase the focus on higher end phones and continue to rationalise costs in order to restore profitability at the business.
At the data centre business, which includes servers, storage, software and services, sales rose 1 percent to USD 1.1 billion. The pretax result was a loss of USD 64 million. Lenovo said the business continues to face "stiff challenges" in mature markets, but was growing its share in China, driven by growth in the hyperscale business.Lenovo's total sales in China fell 8.9 percent year-on-year to USD 2.9 billion, accounting 28.4 percent of its business. EMEA sales fell by 7.3 percent to USD 2.5 billion, and the Americas dropped 6.6 percent to USD 3 billion in the quarter.
