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Lenovo posts growth in slow PC market

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Lenovo Group today announced results for its fourth fiscal quarter and full-year ended 31 March, 2015. In a seasonally slow quarter with significant currency impacts, revenue was US$11,3 (R13,3)-billion, up 21% year-over-year. Excluding the exchange rate impact, the growth rate would be 28%.

Lenovo’s operational excellence delivered expectation-beating quarterly net income of US$100 (R11,8)-million, even after US$94 (R11,1)-million non-cash M&A related accounting charges.

The M&A investments and strong organic growth created a more diverse business for Lenovo with smartphones, tablets, servers and other services contributing 37% of revenues in the quarter compared to 17% the year before.

At the same time, Lenovo continued to deliver exceptional performance in PCs this year with a record 60-million shipments, and strong profitability, all while maintaining its number one position in the market for the eighth consecutive quarter.

“Lenovo continues to deliver strong and balanced performance. Building on our newly acquired businesses and consistent organic growth of our core operations, three growth engines have been formed. While our Mobile Business Group and Enterprise Businesses Group grew rapidly, our PC business delivered even stronger results, with record market share and increased profitability.

“The integrations of Motorola Mobility and System x businesses are on track and realizing good growth momentum, although further time will be required to develop them before they become core businesses like PCs, ” says Yang Yuanqing, Lenovo chairman and CEO.

“In view of the opportunities and challenges of the new Internet+ era, we are ready to transform ourselves from making mostly hardware to a combination of hardware and software services. This will spur a new wave of growth for Lenovo in the coming years.”

For the full year, Lenovo had record revenue of US$46,3 (R54,7)-billion, up 20% year over year. In the same period its pre-tax income before non-cash, M&A-related accounting charges of US$168 (R198)-million, was US$1,14 (R13,4)-billion, up 12% year-over-year.

Similarly, net income before non-cash, M&A-related accounting charges was US$997 (R11,7)-million, up 22% year-over-year. Gross profit for the full year was US$6,7 (R79,1)-billion, an increase of 32% year-over-year. Gross margin was 14,4%, while operating profit for the full fiscal year was US$1,1 (R12,9)-billion, a five% increase year-over-year.

The Company’s gross profit for the fourth fiscal quarter grew to US$1,8 (R21,2)-billion, an increase of 43%. Gross margin was 15,7%. Operating profit was US$127-million, and pre-tax income was US$104-million during the fourth fiscal quarter.

Basic earnings per share in the fourth fiscal quarter was 0,91 US cents, or 76 HK cents. Lenovo’s Board of Directors declared a final dividend of 2,64 US cents, or 20,5 HK cents per share for the fiscal year ended 31 March 2015.