November 8, 2018
Lenovo Group (HKSE: 0992) (PINK SHEETS: LNVGY) today announced results for its second fiscal quarter ended September 30, 2018. For the third straight quarter, Lenovo achieved strong double-digit growth in revenue year-over-year. Group revenue reached US$13.4 billion, up 14% year-over-year (18% YOY excluding currency impact) – reporting its highest quarterly revenue for nearly four years. The company also reported its second consecutive quarter of strong, pre-tax income of US$213 million, six times as much as the previous year (+US$178 million) as all businesses reported profit improvements.
In the second fiscal quarter, Lenovo’s profit attributable to equity holders grew to US$168 million, up US$91 million sequentially, and US$29 million year-over-year. Basic earnings per share in the second fiscal quarter was 1.41 US cents or 11.06 HK cents. Lenovo’s Board of Directors declared an interim dividend of 6.0 HK cents per share.
“Today’s results show that Lenovo’s focus on Intelligent Transformation continues to successfully underpin our growth in both revenue and profitability. But our numbers only tell part of our story. I’m proud of how we are delivering on both our transformation strategy and our turnaround promise. There is no doubt that Lenovo is in a period of strong, sustainable growth and I am confident that our clear mission, strategy and execution capabilities will continue to drive even stronger results in coming quarters,” said Yang Yuanqing, Lenovo Chairman and CEO.
Business Group Overview
During Q2, FY2018/19, Lenovo continued to expand on its new phase of “Intelligent Transformation” growth, thanks to both financial discipline and operational excellence, as well as a lengthening list of technology innovations across all its key business units. Decisive steps to restructure businesses and create new efficiencies taken in prior quarters are already yielding significant results. Lenovo’s key business units each tallied significant growth and market strength during the quarter:
The Intelligent Devices Group, energized by the synergy of shared platforms and resources, delivered a strong revenue growth of 10% year-on-year, amounting to US$11.84 billion.
Lenovo’s Data Center Group (DCG) reported its fifth consecutive quarter of profit growth (PTI% up 9.5% pts YOY) on a 58% YOY increase in revenue to US$1.5 billion. Lenovo is not only innovating on solutions it brings to market, highlighted by the strong growth of Hyperscale and Software Defined Infrastructure (SDI), but how the company is bringing those technologies to market. Key global strategic partnerships such as that with NetApp announced in September, have significantly expanded Lenovo’s storage and data management market segment coverage. Hyperscale continued its triple digit YOY growth for the third consecutive quarter; SDI reported strong revenue growth of 150% and the seventh consecutive quarter of 100%+ growth. The division’s momentum during the quarter was underscored by the triple-digit revenue growth in North America, and double-digit growth in EMEA, China and Asia Pacific geographies. Additionally, YOY profitability in all geographies also improved.
* IDC CY2018 Q3 Worldwide Quarterly Personal Computing Device Tracker
** IDC CY2018 Q2 X86 Server Final Historical
Lenovo (HKSE: 0992) (PINK SHEETS: LNVGY) is a US$45 billion Fortune Global 500 company and a global technology leader in driving Intelligent Transformation through smart devices and infrastructure that create the best user experience. Lenovo manufactures one of the world’s widest portfolios of connected products, including smartphones (Motorola), tablets, PCs (ThinkPad, Yoga, Lenovo Legion) and workstations as well as AR/VR devices and smart home/office solutions. Lenovo’s data center solutions (ThinkSystem, ThinkAgile) are creating the capacity and computing power for the connections that are changing business and society. Lenovo works to inspire the difference in everyone and build a smarter future where everyone thrives. Follow us on LinkedIn, Facebook, Twitter, Instagram, Weibo, read about the latest news via our StoryHub, or visit our website at http://www. lenovo.com.
For the fiscal quarter ended September 30, 2018
(In US$ millions, except per share data)
|Gross profit margin||13.4%||13.7%||(0.3) pts|
|Expenses-to-revenue ratio||11.2%||13.0%||(1.7) pts|
|Other non-operating expenses||(77)||(53)||46%|
|Profit for the period||173||153||13%|
|Profit attributable to equity holders||168||139||21%|
EPS (US cents)