Lenovo Group today announced results for its third fiscal quarter ended December 31, 2018, and it was all positives. The brand posted a group revenue of $14 billion which is its highest group revenue in four years. The revenue is also up 8.5% YOY (12.8% YOY excluding currency impact). The Chinese tech giant also recorded strong pre-tax income of US$350 million (up 133% and over US$200 million higher than that of the previous year.
This is an all-time record for the company as all businesses continued to report profit improvements. The aspect that caught our attention the most is the mobile business group which posted its first worldwide profit since the acquisition of Motorola in October 2014. Lenovo has in recent times focused on reducing cost while still maintaining quality and that may have been the masterstroke. The company has been able to streamline its product portfolio and focus on core markets. One of its stronghold with the Motorola brand is North Amera and it did achieve a breakthrough quarter with volumes outgrowing the market by a staggering 40 points. Furthermore, the mobile business’ focus on other regions yielded results, worthy of mention, is Latin America. Lenovo retained the number two position in Latin America, despite currency fluctuations and supply constraints.
The Lenovo mobile phone gained notoriety for the seemingly deceptive hype preceding the launch of a new phone but that is usually overshadowed by the impressive design and specs that usually accompany the new product. The new products under the Lenovo brand helped the company to build on the momentum quadrupling revenue and reporting strong growth in PTI margin.
On the whole, the Group recorded a net profit of US$233 million for the fiscal quarter, significantly improved from the net loss of US$289 million in the same quarter of last year. Basic earnings per share in the third fiscal quarter was 1.96 US cents or 15.35 HK cents. The Intelligent Devices Group (IDG) posted record revenue and profit; powered by its third straight quarter since the inception of revenue growth – up 6.2% YOY to US$12.4 billion. During the quarter, the PC and Smart Devices (PCSD) business under IDG reported US$10.7 billion in revenue, up 11.6% YOY, and sequentially extending the Group’s momentum from the previous quarter. PC revenue grew 16% YOY, outperforming the market by more than 17 points with PTI margin also improving by 1 percentage point. Lenovo maintained its position as the world’s undisputed leader in PC sales with a record market share of 24.6%. A focus on high-growth and premium segments saw Workstations, Thin and Light devices, and Visuals revenue outgrow the market by more than 30 points, Gaming by 16 points and Chromebook by over 220 points.
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Further, Lenovo’s Data Center Group (DCG) posted its fifth consecutive quarter of profit growth (PTI margin up 3.6 percentage points YOY) on a 31% YOY increase in revenue to US$1.6 billion. In fact, DCG recorded YOY revenue growth in all geographies, highlighted by triple-digit growth in North America, and double-digit growth in Asia-Pacific, EMEA and Latin America. Software Defined Infrastructure (SDI) revenue grew by almost 70% YOY. The Group not only remained number one on the TOP500 list of supercomputers globally but also increased its lead according to data for IDC.
