During the first quarter of its fiscal year, Lenovo has grown faster than any of the other top five PC manufacturers, becoming the world’s third-largest in terms of shipments.
During the first quarter, Lenovo’s worldwide PC shipments grew 23,1% year-over-year. Comparatively, industry PC shipments increased just 2,7% worldwide for the same period, marking the ninth quarter in a row that Lenovo has grown faster than the industry.
Consolidated sales for the first fiscal quarter increased 15% year-over-year to a record of $5,9-billion. The company’s gross profit for the quarter increased 41% year- over-year, with gross margin at 12,5%. Operating profit for the quarter grew 51% year-over year to $123-million. Operating profit margin continued to expand, even after the company’s reinvestment in branding, R&D and mobile internet business to drive future growth.
For the fiscal quarter, Lenovo reported a pre-tax income of $123-million, a 64% jump year-over-year. Profit attributable to equity holders for the quarter was $108-million, increased 98% year-over-year. Basic earnings per share for the first fiscal quarter was 1,11 US cents, or 8.63 HK cents. Net cash reserves as of June 30, 2011, totaled $3,6-billion.
In June 2011, Lenovo announced its acquisition of Medion AG, a leader in PC, multimedia products, mobile communications service and consumer electronics in Germany. The acquisition will double Lenovo’s market share in Germany and make it the second-largest PC company in Europe’s largest PC market. The Medion deal will also help fuel Lenovo’s expansion in consumer PCs and the high-growth mobile Internet market.
Lenovo also completed the formation of the joint venture company with NEC, forming the largest PC group in Japan. This joint venture makes Lenovo the number one PC vendor in two out-of-the three largest PC markets in the world.
“The board is very satisfied with Lenovo’s first quarter results. Since we adjusted our leadership team in early 2009, our business continues to climb and everything has been executed well according to our original plans,” says Lenovo chairman Liu Chuanzhi. “Lenovo has an outstanding leadership team, the right approach to developing strategies, and strong execution capabilities, demonstrated by our performance this quarter.
“Our results show that Lenovo’s acquisition of the IBM PC business has become a success. In future quarters, you will see clearly that we will take what we’ve learned from this acquisition and apply that knowledge towards our joint venture with NEC in Japan and our acquisition of Medion in Germany.”
Yang Yuanqing, Lenovo CEO, adds: “The solid execution of the successful “Protect and Attack” strategy fueled Lenovo’s strong performance in the past fiscal quarter that we have achieved record high in global shipments, revenue as well as global market share. At the same time, we outperformed the industry in all geographies, customer segments and product segments.
“Over the past two years, we have placed emphasis on and invested significantly in our business growth. Our global market share has now reached double-digits and we have attained a double-digit share in a greater number of our strategic markets. Starting this year, we are advancing to a more balanced strategy of continuing to grow, while shifting our focus more on profitability.
Lenovo China recorded $2,8-billion in consolidated sales in the first fiscal quarter, accounting for 47,9% of the company’s worldwide sales.
In emerging markets, Lenovo’s consolidated sales totalled $1-billion for the first fiscal quarter, or 17,5% of the company’s worldwide sales. Lenovo’s PC shipments across the region increased dramatically by 46,5% in the quarter, more than three-times faster than the industry growth rate in this region of 14,7% year-over-year. Lenovo saw market share gains throughout the region for a total market share of 6,9, highlighted by its record-high double-digit market share in India at 10,8% after a 3,6 points gain in that country during the first quarter year-over-year.
Mature markets posted $2,1-billion in consolidated sales, or 34,6% of worldwide sales during the first fiscal quarter. Despite a year-over-year 9,4% decrease in the industry’s PC shipments across the region, Lenovo grew its PC shipments in the quarter by 8,5 percent. Of particular note, Lenovo’s PC shipments in North America grew 30,8%, compared to the market that fell 4%, allowing it to pick up 1,9 points of market share there. In Japan, Lenovo increased PC shipments by 14% year-over-year, in a market that overall grew at 2,9% for the quarter.