Home / Lenovo kick-starts Fy19/20, doubling Year-On-Year Income

Lenovo kick-starts Fy19/20, doubling Year-On-Year Income

Group revenue grew year-on-year for eight consecutive quarters, reaching US$12.5B in Q1 FY19/20

Yang Yuanqing, Lenovo Chairman and CEO
Yang Yuanqing, Lenovo Chairman and CEO

Lenovo Group that its revenue in the first quarter of 2019 reached US$12.5 billion, resulting in the eighth consecutive quarter of growth.

Pre-tax income more than doubled year-on-year, growing by US$127 million to reach US$240 million. Net income also more than doubled, up US$85 million to US$162 million. Basic earnings per share for the first quarter were 1.37 US cents.

“This fiscal year kicked off to an excellent start. Once again, this quarter’s strong results provided solid evidence that Lenovo’s Intelligent Transformation is enabling the company to drive sustainable, profitable growth in today’s dynamic and changing world. Our persistent execution and operational efficiency allows us to bring our vision to life and deliver smarter technology for all,” said Yang Yuanqing, Lenovo Chairman and CEO.

Lenovo is positioned better, given a globally balanced revenue mix, footprint across 180 markets, and more flexible majority-owned manufacturing base.  To date there has been negligible material impact on the business.

Business Group Overview

The results are led by the Intelligent Devices Group (IDG). The PC and Smart Devices Group (PCSD), one of its two business units, continued double-digit (12%) revenue growth while achieving its highest-ever profit in a fiscal first quarter, and further improving industry leading profitability. Pre-tax income was US$524 million, up US$98 million.  

Americas and Asia Pacific achieved 20% and 40% year-on-year revenue growth respectively and all four geographies (Americas, Asia Pacific, China, EMEA) each delivered over US$2 billion in revenue, demonstrating the geographical balance and sustainability of this business.

In PCs, volume outgrew the market, which as a whole is experiencing a recovery, by over 13 points, and the group hit an all-time record PC market share of 24.9%.  This means one in every four PCs built in the world is a Lenovo PC – cementing Lenovo’s position as the worldwide number one in PCs.

This strategy enables the company to outgrow the market significantly across high-growth and premium categories including Workstation, Thin and Light, Visuals, Gaming PCs and Chromebook. Looking forward, the PC and Smart Device group will continue to drive premium-to-market growth and industry-leading profitability by focusing on premium segments as well as innovating in Smart IoT, commercial Smart IoT and developing new devices for homes and offices.

IDG’s second business unit, the Mobile Business Group (MBG), delivered another profitable quarter and improved pre-tax income by US$100 million for the 4th consecutive quarter. In the North America market, volume outgrew the market by more than 37 points and pre-tax income margin improved by over 14 points year-on-year. In the company’s Latin America stronghold, volume has grown with or above the market for 11 quarters.

Going forward, the mobile business will continue to maintain profitability and seek opportunities to drive profitable growth in new markets with new innovative products.

The Data Center Group (DCG) continued to improve profitability year-on-year for the eighth consecutive quarter. Storage revenue grew more than 80% year-on-year and Software Defined Infrastructure (SDI) continued to grow at a double-digit rate year-on-year.

Overall revenue declined due to a small number of large cloud customers reducing their purchasing after rapid infrastructure growth over the past year and a lower average unit revenue due to declining component prices.

In High Performance Computing the company extended the Number 1 position in the Top 500 Supercomputer list to 173 systems across 20 markets – continuing to support ground-breaking scientific research and applications around the world. 

The group will continue to expand as a full stack Data Center player, driving SDI, storage, networking, HPC, AI, IoT, service and solution led sales while strengthening in-house design and manufacturing capability for Hyperscale.