Lenovo says profit to soar on PC market rebound

Company posts record annual revenue as market share climbs and says it is aiming to increase sales of smartphones and tablets worldwide

PUBLISHED : Thursday, 23 May, 2013, 1:25pm
UPDATED : Friday, 24 May, 2013, 4:37am

Lenovo, which posted record-high annual revenue and net income for the year ending March 31, said it expects the slumping global personal computer industry will rebound in the second half of this year and help boost the company's profitability.

"The PC market will see growth," Lenovo's chief executive, Yang Yuanqing, said yesterday. "But we're now more than just a PC company, so we will grow even faster."

Yang said that Lenovo, the world's second-biggest personal computer supplier, would focus its investments this year on expanding sales of smartphones and media tablets worldwide, while quickly developing its enterprise server and storage system businesses.

The company reported yesterday a 90 per cent increase in net income to US$127 million in the three months to March, up from US$67 million a year earlier.

That was driven by improved margins and market share gains in the personal computer market, as well as growing sales of smartphones and tablets.

Lenovo, which has its headquarters in Beijing and in North Carolina in the United States, saw its revenue rise 4 per cent last quarter to a record US$7.8 billion, up from US$7.5 billion the previous year. The consensus market estimates were US$107.4 million in net income and US$7.9 billion in revenue.

Wong Wai-ming, the company's chief financial officer, said: "This was the 14th consecutive quarter that the company achieved year-on-year growth, despite the overall PC market showing negative growth in the past four quarters."

For its full financial year to March, Lenovo's net income rose 34 per cent to a record US$635 million, while total revenue was up 15 per cent to a new high of US$34 billion.

Lenovo's global market share climbed to a record-high 15.5 per cent on the back of its 10 per cent year-on-year shipment growth to a new high of 52.4 million units in the year to March, according to preliminary estimates by the research firm IDC.

The global personal computer market, in contrast, declined 8 per cent year on year because of slow economic conditions and stronger consumer demand for smartphones and tablets. While Lenovo operated in more than 160 countries worldwide, it reported that the mainland accounted for 43 per cent of its total sales for the year.

"We will be more focused on increasing profitability [in the current financial year]," Yang said.

Yang said he expected Lenovo's smartphones would be released in more emerging markets, while the company will also target Europe and North America. Lenovo smartphones, the No2 brand on the mainland, are also sold in Russia, Vietnam, the Philippines, Indonesia and India. Within two years, Yang expected Lenovo's tablets to have "the same level of market share that we have in notebooks today", he said. The company is the world's second-largest notebook computer supplier.

"We will also grow our server and storage businesses to become a relevant global player [in these products] in the next three years," Yang said.

Lenovo's share price climbed 2.79 per cent yesterday to finish at HK$7.38, its highest close since reaching HK$7.53 on April 10.