HONG KONG. - Thursday, August 14th 2014 [ME NewsWire]
Record high PC market share approaching 20% and strong momentum in mobile
Revenue of US$10.4 billion
Pre-tax income of US$264 million and earnings of US$214 million
Basic EPS of 2.06 US cents, or 15.97 HK cents
Net cash reserves of US$3.58 billion (as of June 30, 2014)
(BUSINESS
WIRE) Lenovo Group today reported results for its first fiscal quarter
ended June 30, 2014, with quarterly revenue of US$10.4 billion, an 18
percent increase year-over-year while quarter pre-tax income increased
22 percent year-over-year to US$264 million. Earnings grew 23 percent
year-over-year to US$214 million, while the Company hit market share and
financial performance milestones.
Lenovo maintained its number three
ranking in smart connected devices growing shipments by 28 percent
year-over-year. It has been the world’s largest PC maker for five
consecutive quarters with its highest-ever quarterly market share of
19.4 percent* up 2.7 points year-over-year, driven by big share gains in
EMEA and the Americas. Lenovo’s PC shipments for the first fiscal
quarter were up 15 percent to 14.5 million units, the 21st quarter in a
row that Lenovo outperformed the industry as a whole. In tablets, Lenovo
became the 3rd largest vendor with 2.3 million devices shipped, a
growth of 67 percent or nearly 8 times the pace of this market. In
smartphones, Lenovo sold more smartphones than PCs for the first time
ever with record volume of 15.8 million units, up 39 percent. Despite
fierce competition in China, Lenovo became the number 1 smartphone
vendor in this country with 13 million phones sold.
The Company’s
gross profit for the first fiscal quarter increased 13 percent
year-over-year to US$1.3 billion, with gross margin at 13 percent.
Operating profit for the quarter grew 40 percent year-over year to
US$283 million. Basic earnings per share for the first fiscal quarter
was 2.06 US cents, or 15.97 HK cents. Net cash reserves as of June 30,
2014, totaled US$3.58 billion.
“This has been a quarter of milestones
for Lenovo – record PC share, a number three ranking in worldwide
tablets for the first time, and an even stronger number four global
smartphone position,” said Yuanqing Yang, Chairman and CEO of Lenovo.
“As the PC industry recovers, the smartphone market continues its shift
from premium to mainstream, and our acquisitions of Motorola Mobility
and IBM x86 proceed toward completion, we see even more opportunity to
keep growing rapidly. Lenovo continues to outperform the market and meet
our commitments to improve profitability in our core businesses, while
building strong pillars for future growth across our entire portfolio.”
GEOGRAPHIC OVERVIEW
China
totaled US$3.8 billion in revenue in the first fiscal quarter, an
increase of 2 percent year-over-year, accounting for 36 percent of the
Company’s worldwide revenue. Lenovo protected the China profit pool and
improved margins there by 0.3 points year-over-year to achieve operating
margins of 5.5 percent. Operationally, it strengthened its leadership
in PCs with 37.1% share. According to IDC, Lenovo surpassed Samsung to
become the largest smartphone maker in the country. In mobile devices,
Lenovo continued to improve profitability with broadened routes to
market and a greater focus on internet-enabled, open market sales.
In
Europe/Middle East/Africa (EMEA), Lenovo had an extremely strong
quarter with revenue increasing 49 percent or US$921 million
year-over-year to reach US$2.8 billion, or 27 percent of Lenovo’s first
quarter worldwide revenue. EMEA saw record highs in PC share and
operating margin, hitting the number one position in notebooks for the
first time and achieving a number one position in 15 EMEA countries,
while smartphone shipments surpassed 1 million devices for the first
time. During the quarter, Lenovo’s PC shipments in EMEA increased 4.8
share points year-over-year in the quarter, to reach an all time high of
18 percent.
In Asia Pacific, Lenovo’s revenue was up $270 million to
reach US$1.6 billion in the first quarter, or 15 percent of the
Company’s worldwide revenue. Lenovo’s PC market share in Asia Pacific
was up nearly two share points year-over-year to reach 15 percent.
Smartphone shipments in the region were 1.5 million units, up 3.7 times
from the same quarter a year earlier. Operating profit margin in the
region was 4.1 percent, up dramatically from 0.9 percent a year earlier.
Lenovo grew its number one position in Japan, while improved
performance in this market drove the region’s robust profitability
improvements.
In the Americas, revenue was US$2.2 billion in the
first fiscal quarter, an increase of 19 percent year-over-year,
comprising 22 percent of the Company’s worldwide revenue. Operating
profit margin was 1.1 percent, a 0.3 point decrease compared to last
year as the Company continued investments in Latin America and Brazil.
The Americas saw a record high PC market share of 12.5 percent, up 23.7
percent or 3 market share points year-over-year, as well as record share
in the United States of 11.3 percent, which was up 1.5 points
year-over-year.
PRODUCT OVERVIEW
During the first fiscal quarter,
Lenovo’s Laptop computers generated 49 percent of Lenovo’s total
revenue. Across the industry, laptop shipments were down 3.7 percent
year-over-year, an improvement from the year before when declines were
nearly 13 percent year-over-year driven by corporate refresh and
innovations in the category. Helped by this stabilizing trend,
consolidated revenues for Lenovo’s laptop PC business worldwide in the
first fiscal quarter totaled US$5.1 billion, an increase of 12 percent
year-over-year. The Company gained nearly four share points and achieved
a market share of 21 percent. During the first quarter, Lenovo
announced the ThinkPad 10, a ten-inch premium multimode business tablet
ideally suited for business users, as well as the Company’s first
consumer Chromebooks, the N20 and N20p. These Chromebooks offer
consumers two ways to enjoy the Chrome experience in a thin and light
form. Lenovo also introduced the B50 laptop for small businesses, and
the Z40 and Z50 laptops for more entertainment focused users.
Lenovo
took the number one position in Desktop PC shipments which were up 12.1
percent year-over-year during the first fiscal quarter, compared to an
overall industry increase of 2.4 percent. The 1.5 share point increase
year-over-year gave Lenovo a desktop market share of 17.5 percent.
Consolidated revenues of Lenovo desktop PCs were up 20 percent
year-over-year in the first quarter to US$3.0 billion, or 29 percent of
the Company’s total revenue. During the first quarter, Lenovo introduced
several new desktop PCs starting with the A Series A540 AIO
(all-in-one) desktop built for families and equipped with the latest
audio and video features for enjoying digital content. Lenovo also
revealed its newly redesigned ThinkStation P300 entry-level workstation,
featuring unparalleled flexibility, ideal for professionals who need
ISV application certification hardware at a reasonable price.
Consolidated
revenues of Lenovo’s Mobile Device Business**, including smartphones
and tablets, increased 32 percent year-over-year during the first fiscal
quarter to US$1.6 billion, representing 15 percent of the Company’s
total revenue during the quarter. In China, Lenovo achieved the number
one position in smartphones, while it became the worldwide number 3
maker of tablets. During the quarter, Lenovo announced several new
A-series Android tablets, offering configurations and screen sizes to
match consumer needs for both ultra-portable tablets and multimedia
performers. The portfolio includes the seven-inch TAB A7-50, the
eight-inch TAB A8, and the ten-inch TAB A10, equipped with an optional
Bluetooth keyboard.
Lenovo continues to drive innovation across Smart
Connected Devices, with new and exciting smartphone, ecosystem and
enterprise products coming in the second half of its fiscal year. Lenovo
is exploring new internet-centric growth opportunities as evidenced in
its recent announcement of the New Business Development (NBD) platform
where Lenovo is engaging partners to drive innovation across new
hardware categories. Finally, Lenovo’s efforts on both the Motorola
Mobility and IBM x86 server business transactions remain on track and
the Company remains confident to close both before the end of the year.
* See IDC data 2Q 2014, all market share data from IDC
**
Previously these revenues were reported under Mobile Internet and
Digital Home (MIDH). Beginning in this quarter, they will be reported
under the Mobile Device Business heading.
ABOUT LENOVO
Lenovo
(HKSE: 992) (ADR: LNVGY) is a US$39 billion personal technology company,
the largest PC company in the world, serving customers in more than 160
countries. Dedicated to building exceptionally engineered PCs and
mobile internet devices, Lenovo’s business is built on product
innovation, a highly-efficient global supply chain and strong strategic
execution. Formed by Lenovo Group’s acquisition of the former IBM
Personal Computing Division, the company develops, manufactures and
markets reliable, high-quality, secure and easy-to-use technology
products and services. Its product lines include legendary Think-branded
commercial PCs and Idea-branded consumer PCs, as well as servers,
workstations, and a family of mobile internet devices, including tablets
and smartphones. As a global Fortune 500 company, Lenovo has major
research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen,
China; Sao Paulo, Brazil, and Raleigh, North Carolina. For more
information see www.lenovo.com.
Contacts
Lenovo
Hong Kong
Angela Lee, +852 2516 4810
angelalee@lenovo.com
China
Eric Guo, +8610 5886 6114
guoty@lenovo.com
United States
Brion Tingler, +1 917 528 1992
btingler@lenovo.com
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