[November 02, 2011] |
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Lenovo Reports Second Quarter 2011/12 Results
BEIJING --(Business Wire)--
Lenovo (News - Alert) Group today reported results for its second fiscal quarter ended
September 30, 2011. Demonstrating the Company's rapid growth, Lenovo has
become the world's second-largest PC vendor, just one quarter after
being named the world's third-largest PC vendor. During the second
quarter, Lenovo's worldwide PC shipments grew 35.8 percent
year-over-year, seven times the PC industry growth rate of 5.0 percent
worldwide for the same period. This is the tenth consecutive quarter
that Lenovo has grown faster than the industry and the eighth quarter in
a row that Lenovo has grown the fastest among the top four PC vendors.
With a continued focus on balanced growth across all markets, product
lines and customer segments, consolidated sales for the second fiscal
quarter increased 35.2 percent year-over-year to a record US$7.8
billion. Lenovo also recorded its highest-ever worldwide quarterly
market share of 13.5* percent, and gained share points in China, mature
markets and emerging markets alike.
At the same time, net earnings for the Company increased a whopping 87.9
percent during the second fiscal quarter, as profit attributable to
equity holders for the quarter totaled US$144 million.
Lenovo's gross profit for the second fiscal quarter increased 59.8
percent year-over-year, to US$948 million, with gross margin at 12.2
percent. Operating profit for the second quarter was US$166 million, a
55.3 percent increase over the second quarter last year. Lenovo's second
quarter pre-tax income was US$165 million, up 62.3 percent
year-over-year.
Basic earnings per share for the second fiscal quarter was 1.41 US
cents, or 10.99 HK cents. Net cash reserves as of September 30, 2011,
totaled approximately US$ four billion. The Board of Directors declared
an interim dividend of 3.8 HK cents per share.
"Lenovo's performance this quarter was outstanding. Despite significant
investments for future growth, pre-tax income increased and the Company
over-achieved its targets," said Liu Chuanzhi, Lenovo chairman. "The
management team developed strategies in the right way, built a solid
corporate culture and the morale of the whole staff is very high. The
Board is very satisfied."
"In just two quarters, Lenovo has gone from the number four to the
second largest PC vendor in the world. We achieved balanced growth
across all markets, product categories and geographic regions. In China,
we continued to extend our lead, while in Emerging Markets we have been
growing more than three times the market growth rate. Including the
successful integration of both the NEC (News - Alert) and Medion businesses in Mature
Markets, we recorded for the first time a turnover exceeding that of the
China market. Not only has profitability substantially increased, but
also with record market share," said Yang Yuanqing, Lenovo CEO. "We are
very optimistic about the future of the PC industry. Our aspiration is
not only to be the leader of traditional PCs, but to also accomplish
much more in the extended PC categories, such as the smartphone and
tablet."
GEOGRAPHIC OVERVIEW
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Lenovo China achieved US$3.2 billion in consolidated sales
(includes Mobile Internet Digital Home business) in the second fiscal
quarter, an increase of 20.7 percent year-over-year, accounting for
40.8 percent of the Company's worldwide sales. During the second
quarter, Lenovo grew its number-one position in China to a leading
market share of 31.5 percent, up 2.7 points year-over-year. Lenovo's
PC shipments in China grew 25.8 percent year-over-year in the quarter,
almost double the overall industry increase of PC shipments in China
of 15 percent. China has now surpassed the U.S.A. as the world's
largest PC market, and as the number one PC vendor in China, Lenovo is
well-positioned to deliver the products and services that customers in
China want, particularly those customers in China's emerging cities,
where Lenovo is keenly focused on outperforming its key competitors.
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In Emerging Markets,** For the second quarter in a row, Lenovo
grew more than three times faster than the industry, with PC shipments
in the region up 37.9 percent, compared to an industry growth rate in
the second fiscal quarter of 10.9 percent. Leading the way, were
Brazil, India, Latin America and Russia, all of which saw an average
year-over-year gain of 42 percent in PC shipments during the second
quarter. Consolidated sales for the quarter increased 20.8 percent
year-over-year to $1.3 billion, or 16.6 percent of the Company's total
worldwide sales. Lenovo's market share in the region climbed to eight
percent during the second fiscal quarter, highlighted by double-digit
market share in both India and Russia, and aided by brand-building
campaigns running across a variety of media.
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Mature Markets*** Despite a difficult environment that saw
overall PC shipments across the region drop by three percent in the
second fiscal quarter, Lenovo maintained positive growth with PC
shipments across the region up an eye-opening of 54.5 percent
year-over-year. Consolidated sales for the second quarter rose a
noteworthy 61.1 percent to US$3.3 billion, or 42.6 percent of the
Company's worldwide sales. Lenovo achieved a record market share in
the region of 9.1 percent, picking up 3.4 points year-over-year. The
NEC joint venture and Medion acquisition are beginning to have an
impact in the region, with significant share gains in both Japan and
Western Europe during the quarter. Lenovo/NEC is now the clear market
leader in Japan, giving Lenovo the number one ranking for PC vendors
in two out of the three largest PC markets in the world.
PRODUCT OVERVIEW
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Lenovo laptop computers continued to be the largest contributor
to the company's sales worldwide, generating 57.5 percent of Lenovo's
total sales revenue during the second fiscal quarter. Consolidated
sales for Lenovo's laptop PC business worldwide in the second quarter
increased 29.6 percent year-over-year. Lenovo laptop PC shipments
worldwide in the second quarter were up 35.4 percent year-over-year,
compared to an industry increase of 7.4 percent. During the quarter,
Lenovo announced the ThinkPad Edge 14-inch E425 and 15.6-inch, E525.
Both models are designed for small-to-medium (SMB) business customers
and feature a slimmer, more polished design, complemented by powerful,
reliable technology with voice and video capabilities. For consumers,
Lenovo announced three new luxury laptops - the IdeaPad U300s
ultrabook, and the U300 and U400 laptops, designed for fashion-minded
customers, who want a product that is stylish, yet powerful and
productive.
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Consolidated sales of Lenovo desktop computers worldwide
increased 37.8 percent year-over-year in the second fiscal quarter, or
34.1 percent of Lenovo's total sales revenue. Desktop shipments for
the same period increased 36.3 percent, compared to an industry
increase worldwide of 1.7 percent. The Company added to its popular
all-in-one desktop PC lineup with the introduction of the ThinkCentre
M71, designed for businesses, schools and government. The new
ThinkCentre boasts a variety of performance features from fast boot to
interactive touchscreen options and advanced conferencing features.
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Lenovo's Mobile Internet Digital Home (MIDH) business in China
saw handset unit shipments grow 39 percent year-over-year during the
first fiscal quarter, compared to an overall industry growth rate of
31 percent. Feature phone shipments were up 28 percent year-over-year,
in a market that saw only four percent growth overall. With the launch
of Lenovo's new entry-level A60 smartphone, early sales indicators
that show Lenovo growing much faster than the market are encouraging.
Lenovo's previously announced tablets are starting to make headway,
and Lenovo is already ranked number two in the China tablet market.
During the second quarter, the previously announced ThinkPad Tablet,
the Company's first 'business-class', Android (News - Alert)-based tablet, went on
sale to customers in the U.S.A. and other markets, and as the second
quarter closed, Lenovo announced the new IdeaPad Tablet A1, a
consumer-friendly, seven-inch tablet based upon the Android 2.3
operating system.
ABOUT LENOVO
Lenovo (HKSE:0992) (PINK SHEETS:LNVGY) is a $US21 billion personal
technology company - and the second largest PC company in the world,
serving customers in more than 160 countries. Dedicated to building
exceptionally engineered PCs and mobile internet devices, Lenovo's
business is built on product innovation, a highly-efficient global
supply chain and strong strategic execution. Formed by Lenovo Group's
acquisition of the former IBM (News - Alert) Personal Computing Division, the company
develops, manufactures and markets reliable, high-quality, secure and
easy-to-use technology products and services. Its product lines include
legendary Think-branded commercial PCs and Idea-branded consumer PCs, as
well as servers, workstations, and a family of mobile internet devices,
including tablets and smart phones. Lenovo has major research centers in
Yamato, Japan; Beijing, China; and Raleigh, North Carolina. For more
information, see www.lenovo.com.
* see IDC (News - Alert) WW PC Tracker, 2011Q3 preliminary data
** includes Africa, Asia Pacific, Central/Eastern Europe, Hong Kong,
India, Korea, Latin America, Mexico, Middle East, Pakistan, Russia,
Taiwan, Turkey
***includes Australia/New Zealand, Israel, Japan, North America, Western
Europe and global accounts
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LENOVO GROUP
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FINANCIAL SUMMARY
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For the second quarter ended September 30, 2011
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(in US$ millions, except per share data)
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Q2 11/12
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Q2 10/11
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Y/Y CHG
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Sales
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7,786
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5,760
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35
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%
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Gross Profit
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948
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593
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60
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%
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Gross Profit Margin
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12.2
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%
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10.3
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%
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1.9
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pts
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Operating Expenses
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(782
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(486
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61
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%
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Expenses-to-Revenue Ratio
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10.0
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%
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8.4
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%
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1.6
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pts
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Operating Profit
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166
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107
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55
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%
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Other Non-Operating Expenses
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(1
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(5
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(77
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%)
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Pre-tax Income
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165
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102
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62
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%
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Taxation
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(20
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(25
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(19
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%)
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Profit for the period
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145
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77
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89
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%
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Non-controlling interests
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(1
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0
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n/a
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Profit attributable to Equity Holders
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144
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77
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88
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%
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EPS (US cents)
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Basic
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1.41
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0.81
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0.60
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Diluted
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1.38
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0.76
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0.62
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