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Lenovo annual revenues dip across board

Europe, Middle East & Africa sales fell by 7 percent

Lenovo annual revenues dip across board
Lenovo PC and devices sales declined 7% despite shipping 13.2 million PCs in the quarter.

Lenovo Group has announced a quarterly revenue of US$10.1 billion, a six percent decrease year-over-year.

Quarter-to-quarter, this represented a 10 percent increase. First quarter pre-tax income increased 297 percent year-over-year to US$206 million. Net income increased 64 percent year-over-year to US$173 million.

The Company’s gross profit for the first fiscal quarter decreased 7 percent year-over-year to US$1.5 billion, with gross margin at 15.3 percent. Operating PTI for the quarter increased 97 percent year-over-year to US$281 million. Basic earnings per share for the first fiscal quarter was 1.57 US cents, or 12.19 HK cents. Net debt as of June 30, 2016, totaled US$1.2 billion.

In the PC and Smart Device Business Group, or PCSD, which includes PCs and tablets, Lenovo’s quarterly sales were US$7 billion, down seven percent year-over-year. Pre-tax income was US$370 million, an increase of 2.4 percent year-over-year. Pre-tax income margin was strong at 5.3 percent, improving 0.5 points year-over-year, aided by good margins in China and increased profitability of the Latin America and Brazil PC businesses.

Lenovo remained #1 worldwide for the 13th consecutive quarter with 21.1 percent market share, with gains in every geography except EMEA. It shipped 13.2 million PCs in the quarter, a 2.3 percent decline, which represented a 1.8 point premium to the overall market, which saw a 4.1 percent decline.

In the Mobile Business Group, or MBG, which includes products from Motorola and Lenovo-branded mobile phones, Lenovo quarterly sales were US$1.7 billion, down 6 percent year-over-year, but nearly flat in constant currency. MBG’s total pre-tax loss was US$206 million, with a pre-tax profit margin of negative 12.1 percent. The transition to higher priced products drove pre-tax profit margin up 2.9 points year-over-year.

In the Data Centre Business Group, or DCG, which includes servers, storage, software and services sold under both the Lenovo ThinkServer and the System x brands, sales were US$1.1 billion, up 1 percent. DCG's reported PTI – which included non-cash, M&A-related accounting charges – was negative US$64 million with a pre-tax profit margin of negative 5.9 percent.

Lenovo in Europe, Middle East & Africa had consolidated sales in the first quarter of US$2.5 billion, a year-over-year decline of 7.3 percent driven by a mix of operational and macroeconomic challenges. EMEA accounted for 24.5 percent of Lenovo’s total worldwide sales. Pre-tax profit margin was negative 2 percent, a decrease of 3.5 points year-over-year.

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