[May 24, 2018] |
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Lenovo Drives Strong Fourth Quarter and FY2017/2018 Results; Innovation and Efficiencies Power Continued FY2018/2019 Improvement
Lenovo (News - Alert) Group (HKSE: 0992) (PINK SHEETS: LNVGY) today announced
results for its fourth fiscal quarter and full fiscal year ended March
31, 2018. For its fourth fiscal quarter FY2017/18, Lenovo reported
US$10.6 billion in revenue, up 11% year-on-year - the first double digit
increase in 10 quarters - demonstrating solid performance momentum.
In the fourth fiscal quarter Lenovo's group pre-tax income was US$37
million, up 143% year-on-year from US$15 million. The company also
improved profitability in all three key businesses for the quarter
year-on-year, with group operational performance1 improving
US$255 million year-on-year to US$76 million. Profit attributable to
shareholders for Q4 was US$33 million, lower than the same period last
year due to a larger tax credit recorded in FY2016/17.
For the full fiscal year, the company's overall revenue was over US$45.3
billion, up 5 % year-on-year. Group operational performance reached
US$193 million, improving US$96 million year-on-year. The company
recorded a US$189 million net loss for the full year mainly due to a
one-time non-cash write-off charge of US$400 million from deferred
income tax assets in Q3 FY2017/18.
Basic earnings per share in the fourth fiscal quarter was 0.28 US cents
or 2.19 HK cents, and for the full year basic loss per share was 1.67 US
cents or 13.05 HK cents. Lenovo's Board of Directors declared a dividend
of 2.61 US cents, or 20.5 HK cents per share for the fiscal year ended
March 31, 2018.
Business Group Overview
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Lenovo continued to execute on its three-wave strategy, emphasizing
leadership in core businesses, growth in key segments and investment
in emerging technologies. All three of Lenovo's key business groups
demonstrated strength and momentum in both the fourth quarter and
fiscal year
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Personal Computers and Smart Devices (PCSD) reported US$7.7 billion in
FYQ4 revenue, up 16% from the same period a year earlier and the
highest growth in four years. For the year, PCSD reported US$32.4
billion, up 8% from FY2016/17
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The Data Center Group (DCG) revenue grew 44% during the quarter
compared to Q4 FY2016/17 to US$1.2 billion. For the year, DCG reported
US$4.4 billion in revenue, up 8% from FY2016/17
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The Mobile Business Group (MBG (News - Alert)) revenue for Q4 FY2017/18 was US$1.3
billion and for the full year was US$7.2 billion. Lenovo remains
optimistic that aggressive cost-cutting and exceptionally strong
performances by MBG in Latin America (volume grew 40% year-on-year for
the full year), or more than 20 times the industry) and North America
(volume +57% year-on-year for the full year) are expected to yield
substantially improved results as FY2018/19 continues
"Last quarter, we resumed double-digit revenue growth with strong
profitability improvement year-on-year, closing the fiscal year with a
strong momentum and proving that Lenovo has truly entered a new phase of
growth," said Yang Yuanqing, Lenovo Chairman and CEO. "Lenovo's vision
has long been to become a global leader in intelligent transformation.
We will focus on building competitiveness in Smart IoT devices, data
center infrastructure and vertical intelligent solution, and we are well
positioned to take advantage of smart IoT and intelligence era."
During the quarter Lenovo also announced the integration of its Personal
Computer and Smart Devices Group with its Mobile Business Group,
creating the Intelligent Devices Group (IDG). This new group will
further fast-track the company's innovation leadership and ambitions for
growth across the full spectrum of smart devices. This new structure
will create a number of efficiencies by leveraging shared global supply
chain and services. IDG will also accelerate Lenovo innovation as
communications and computing technologies come together under a single
platform to better connect devices, users, applications and content.
ADDITIONAL BUSINESS GROUP HIGHLIGHTS
PC and Smart Devices (PCSD) business group: During
the fourth quarter, PCSD posted strong revenue growth of 16% compared to
the same period a year earlier. For the year, PCSD reported an 8%
increase in revenue, and remained the world's #1 PC and Tablet maker2,
with market share growing 0.2 points to 15.6% globally. Additionally:
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Returned to industry-leading PTI margin of 5% in Q4 FY2017/18. All
geographies continued to be profitable with margin expansion in four
out of five
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Strong, double-digit, year-on-year revenue growth across regions in
the Americas, Asia Pacific, and EMEA
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Focused strategy in high-growth segments paying off with strong
double-digit shipment growth year-on-year in both Gaming (+42%) and
Workstation (+32%) in FYQ4. Both surpassed the US$1 billion-dollar
scale in FY2017/18 with gaming reporting double-digit revenue growth
year-on-year
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Named Best Laptop Brand 2018 by LAPTOP Magazine for a second
consecutive year
Data Center Group (DCG): The Data Center group is well
positioned to provide the infrastructure for the smart IoT era and
continues to be a significant growth business for Lenovo. The group's
financial performance serves as a tangible proof point that the DCG
strategy is yielding significant results:
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In Q4 FY2017/18 delivered second consecutive quarter of double-digit
year-on-year growth and achieved highest revenue growth (+44%) since
the IBM (News - Alert) System x acquisition in 2014 - with all geographies showing
positive year-on-year revenue growth
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North America and EMEA posted their fourth consecutive quarter of
strong year-on-year revenue growth
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Software Defined Infrastructure (SDI) continued strong revenue growth
- 130% year-on-year
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HPC solidified the number two position globally in the top 500
Supercomputing list, fast closing the gap to number one player
Mobile Business Group (MBG): During the quarter MBG moved with
urgency to reshape the business for future growth and to accelerate
progress toward profitability. This included the appointment of Sergio
Buniac to lead the business outside of China; a realignment of the
product portfolio ahead of forthcoming launches; overall channel
inventory reduction, and a strategic market review to identify the
opportunities for most profitable growth.
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In Q4 FY2017/18 Latin America remained the strong core for MBG,
recording double-digit (13%) year-on-year revenue growth
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In North America, shipments continued to show strong, year-on-year
growth as Lenovo strengthened presence with mainstream models and
carrier expansion. North America shipments grew 54% year-on-year for
Q4 and gained 1.1pts of market share to 3.8% in Q4 FY2017/18
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Expense reduction for the new fiscal year as part of a strategy to
reduce loss and focus on strengthening MBG's leading position and
profitability in Latin America, North America and Western Europe by
simplifying the portfolio, optimizing the cost structure and
leveraging shared platforms
Lenovo Capital and Incubator Group: Lenovo continues to be a
beneficiary and driver of some of the most robust trends in global
technology innovation, notably artificial intelligence. Lenovo's
investment arm, Lenovo Capital and Incubator Group (LCIG), funded 85
companies during the past years, and oversaw eight independent spin-offs.
About Lenovo
Lenovo (HKSE: 992) (ADR: LNVGY) is a US$45 billion Fortune 500 company
with a vision to become the global leader in Intelligent Transformation
through smart devices and infrastructure that create the best user
experience. Lenovo manufactures one of the world's widest portfolio of
connected products, including smartphones (Motorola (News - Alert)), tablets, PCs
(Thinkpad, Yoga, Lenovo Legion) and workstations as well as AR/VR
devices and smart home/office solutions. Lenovo's next generation data
center solutions (ThinkSystem, ThinkAgile) are creating the capacity and
computing power for the connections that are changing business and
society. Lenovo works to inspire the different in everyone and build a
smarter future where everyone thrives. Follow us on LinkedIn, Facebook, Twitter, Instagram, Weibo,
or visit us at http://www.lenovo.com/
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LENOVO GROUP
FINANCIAL SUMMARY
For the fiscal quarter and full year ended March 31, 2018
(in US$ millions, except per share data)
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Q4 17/18
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Q4
16/17
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Y/Y CHG
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FY17/18
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Y/Y CHG
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Revenue
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10,638
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9,579
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11%
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45,350
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5%
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Gross profit
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1,544
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1,368
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13%
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6,272
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3%
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Gross profit margin
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14.5%
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14.3%
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0.2pts
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13.8%
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-0.4pts
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Operating expenses
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(1,443)
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(1,294)
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11%
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(5,885)
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8%
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Expenses-to-revenue ratio
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13.6%
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13.5%
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0.1pts
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13.0%
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0.4pts
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Operating profit
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101
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74
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36%
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387
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-42%
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Other non-operating expenses- net
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(64)
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(59)
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9%
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(234)
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28%
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Pre-tax income
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37
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15
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143%
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153
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-69%
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Taxation
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12
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89
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-87%
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(280)
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N/A
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Profit/(loss) for the period/year
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49
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104
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-53%
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(127)
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N/A
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Non-controlling interests
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(16)
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3
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N/A
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(62)
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N/A
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Profit/(loss) attributable to equity holders
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33
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107
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-69%
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(189)
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N/A
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Earnings/(loss) per share (US cents)
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Basic
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0.28
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0.97
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(0.69)
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(1.67)
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N/A
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Diluted
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0.28
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0.97
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(0.69)
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(1.67)
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N/A
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1 Operational performance is measured as profit before
taxation, but excluding restructuring charges and disposal gains on
properties
2 Source: IDC (News - Alert) Quarterly Personal Computing Device Tracker,
2018Q1 Final Historical
View source version on businesswire.com: https://www.businesswire.com/news/home/20180523006607/en/
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