The Strategist

Lenovo returns its profit in the black in Q1

08/17/2018 - 15:32

Chinese Lenovo Group Ltd, one of the world's largest PC manufacturers, has returned to a profitable level in the first financial quarter against the backdrop of an increase in profitability of all major divisions.

neelaka via flickr
neelaka via flickr
The company's press release states that its net profit for the quarter ended June 30 was $ 77 million compared to a net loss of $ 72 million for the same period last year.

Earnings per share were $ 0.65 (a loss of $ 0.66 a year earlier).

The quarterly revenue of Lenovo grew by 19%, to $ 11.913 billion. The revenue growth rate is double-digit for the second consecutive quarter, Lenovo emphasizes.

"We are purposefully implementing our strategy, and all the business divisions of the company have demonstrated improved performance both in revenue and profitability," said Chairman of the Board of Directors and CEO of Lenovo, Yang Yuanqing.

"Lenovo passed the turning point and went to the phase of accelerating implementation of the transformation strategy," he said.

Previously, Lenovo announced creation of the Intelligent Devices Group (IDG), combining operations to produce PCs and smart devices with the mobile business.

In the first financial quarter, IDG increased revenue by 14% to $ 9.95 billion.

For a long time, Lenovo has not been able to get rid of losses in the mobile devices segment after the purchase of Motorola Mobility from Google in 2014.

Last quarter, the company reduced operating expenses in this segment by more than $ 100 million, and also introduced new products and focused on selected markets, where, in its opinion, it could be competitive.

Operating loss of Lenovo's mobile devices in the first quarter was twice less compared to the previous year ($ 65 million and $ 129 million, respectively).

Another lossmaking division of Lenovo, its data centers business, also reduced its operating loss to $ 33 million from $ 114 million. Quarterly revenue of the  department jumped 67.8% to a record $ 1.6 billion.

Lenovo shares went up by 3.4% following the results of trading in Hong Kong on Thursday.