August 16, 2018
Lenovo Group (HKSE: 0992) (PINK SHEETS: LNVGY) today announced results for its first fiscal quarter ended June 30, 2018. For the second straight quarter, Lenovo achieved strong double-digit growth in revenue year-on-year. Group revenue reached US$11.91 billion, up 19% year-on-year. The company also reported strong pre-tax income during the quarter of US$113 million, an improvement of US$182 million year-on-year, as profitability improved across all businesses.
In the first fiscal quarter, Lenovo’s profit attributable to equity holders grew to US$77 million, up US$149 million year-over-year. Basic earnings per share in the first fiscal quarter was 0.65 US cents or 5.10 HK cents.
“As we persistently execute our 3-wave strategy, all our businesses made solid improvements in both revenue and profitability. Lenovo has passed the turning point and entered a phase of ‘acceleration’ – accelerating the execution of our transformation strategy and accelerating the rising momentum in business performance,” said Yang Yuanqing, Lenovo Chairman and CEO. “In the future, we will maintain industry leading profitability and premium to market growth in PCs; return the smartphone business to health; build the data center business into a sustainable growth and profit engine, and continue to invest in ‘Smart IoT + Cloud’ and ‘Infrastructure + Cloud’ to drive long term sustainable return.”
Business Group Overview
With this Q1 FY2018/19 earnings report, Lenovo has turned a corner in its transformation and enters a new phase of growth, thanks to meaningful progress on its strategy and focus on “Intelligent Transformation” during the quarter. Lenovo’s decisive steps to consolidate key businesses into a streamlined, integrated enterprise, along with an emphasis on dynamic revenue generators, are quickly yielding significant returns.
Last quarter, Lenovo announced the creation of its new Intelligent Devices Group (IDG), combining its Personal Computer and Smart Devices Group with its Mobile Business Group. Rethinking the ways these units and their devices interact and impact customers led to IDG’s double-digit, quarterly revenue growth year-over-year, and PC unit market share gains in every geography. At the same time, Lenovo is not only driving, but capitalizing on, global growth trends in both software and services.
Lenovo’s key business units each tallied significant growth and market strength during the quarter:
The Intelligent Devices Group is energized by the synergy of shared platforms and resources, delivered a strong revenue growth of 14% year-on-year, amounting to US$9.95 billion.
Building on a strong Q4, Lenovo’s Data Center Group (DCG) further accelerated its momentum, reporting another record revenue quarter of US$1.6 billion, the third consecutive quarter of double-digit revenue growth, and up 67.8% compared to the same quarter a year earlier. The record high revenue was driven by growth in Software Defined Infrastructure, High Performance Computing & A.I businesses and Hyperscale. Lenovo’s software-defined products, led by the new ThinkAgile brand, once again drove more than triple-digit growth year-on-year, and along with the announcement of the new ThinkAgile CP for next-generation composable cloud infrastructure. The Hyperscale business also grew by triple-digits year-on-year while improving gross profit and diversifying the customer base. Traditional infrastructure continued on a positive trend and flash-based storage solutions showed strong momentum at 42% YOY growth. This quarter also saw Lenovo surpassing HPE to become the #1 supercomputer provider on the TOP500 supercomputing list for the first time, with 117 systems.
With an eye to the future, Lenovo’s Capital and Incubator Group (LCIG) continues to invest and build the Group’s next-generation IT capabilities in AI, IoT, Big Data and VR/AR across various sectors such as manufacturing, healthcare and transportation.
Lenovo (HKSE: 0992) (PINK SHEETS: LNVGY) is a US$45 billion Fortune Global 500 company and a global technology leader in driving Intelligent Transformation through smart devices and infrastructure that create the best user experience. Lenovo manufactures one of the world’s widest portfolio of connected products, including smartphones (Motorola), tablets, PCs (ThinkPad, Yoga, Lenovo Legion) and workstations as well as AR/VR devices and smart home/office solutions. Lenovo’s data center solutions (ThinkSystem, ThinkAgile) are creating the capacity and computing power for the connections that are changing business and society. Lenovo works to inspire the difference in everyone and build a smarter future where everyone thrives. Follow us on LinkedIn, Facebook, Twitter, Instagram, Weibo, read about the latest news via our Storyhub, or visit our website at http://www.lenovo.com/.
For the fiscal quarter ended June 30, 2018
(In US$ millions, except per share data)
|Gross profit margin||13.7||%||13.6||%||0.1 pts|
|Expenses-to-revenue ratio||12.2||%||13.7||%||(1.5) pts|
|Other non-operating expenses||(67||)||(63||)||7||%|
|Profit/(loss) for the period||85||(54||)||N/A|
|Profit/(loss) attributable to equity holders||77||(72||)||N/A|
|EPS (US cents)||