For the third straight quarter, Lenovo achieved strong double-digit growth in revenue year-over-year.
Group revenue for the second fiscal quarter ended 30 September 2018 reached $13,4-billion, up 14% year-over-year (18% YOY excluding currency impact) – reporting its highest quarterly revenue for nearly four years.
The company also reported its second consecutive quarter of strong, pre-tax income of $213-million, six times as much as the previous year (+$178-million) as all businesses reported profit improvements.
In the second fiscal quarter, Lenovo’s profit attributable to equity holders grew to $168-million, up $91-million sequentially, and $29-million year-over-year. Basic earnings per share in the second fiscal quarter was 1.41 US cents or 11.06 HK cents. Lenovo’s Board of Directors declared an interim dividend of 6.0 HK cents per share.
“Today’s results show that Lenovo’s focus on Intelligent Transformation continues to successfully underpin our growth in both revenue and profitability,” says Yang Yuanqing, Lenovo chairman and CEO. “But our numbers only tell part of our story. I’m proud of how we are delivering on both our transformation strategy and our turnaround promise. There is no doubt that Lenovo is in a period of strong, sustainable growth and I am confident that our clear mission, strategy and execution capabilities will continue to drive even stronger results in coming quarters.”
During Q2, FY2018/19, Lenovo continued to expand on its new phase of “Intelligent Transformation” growth, thanks to both financial discipline and operational excellence, as well as a lengthening list of technology innovations across all its key business units. Decisive steps to restructure businesses and create new efficiencies taken in prior quarters are already yielding significant results.
Lenovo’s key business units each tallied significant growth and market strength during the quarter:
* The Intelligent Devices Group, energized by the synergy of shared platforms and resources, delivered a strong revenue growth of 10% year-on-year, amounting to $11,84-billion.
During the quarter, the PC and Smart Devices (PCSD) business under IDG reported $10,2-billion in revenue, up 18% YOY, the first time ever that this business has surpassed $10-billion in revenue. Lenovo is now not only the world’s undisputed leader in PC sales with record market share of 23,7%, but the company also continues to lead industry profitability at 5%. The quarter saw continued strong double-digit growth for high-growth segments including Legion gaming, ThinkStation workstations and thin and light Yoga, ThinkPad and IdeaPad categories – bolstering future premium growth in volume, revenue and profit. The business continues to deliver on its Intelligent Transformation vision with newly launched innovations in Smart IoT products (Lenovo Smart Home Essentials) that follow on from the Lenovo Smart Display launched earlier this year.
* The Mobile Business Group (MBG) under IDG also continued its marked improvement during Q2, executing on its turnaround strategy that sees the business focusing on reducing expense, simplifying the product portfolio and focusing on core profitable markets. The quarter saw a major strategic milestone achieved – with operational break-even of Motorola globally- reducing operating expenses by $175-million compared to Q2 of last year. Of particular note, North American shipments were up sharply during the quarter by 53,4% compared to last year’s Q2, while also showing margin improvement. Topline growth continued in Latin America where Lenovo is number two regionally. The China business greatly improved revenue, volume and profitability (84,6%, 279,4% and PTI% 25,2% respectively.)
* Lenovo’s Data Center Group (DCG) reported its fifth consecutive quarter of profit growth (PTI% up 9,5% pts YOY) on a 58% YOY increase in revenue to $1,5-billion. Lenovo is not only innovating on solutions it brings to market, highlighted by the strong growth of Hyperscale and Software Defined Infrastructure (SDI), but how the company is bringing those technologies to market. Key global strategic partnerships such as that with NetApp announced in September, have significantly expanded Lenovo’s storage and data management market segment coverage. Hyperscale continued its triple digit YOY growth for the third consecutive quarter; SDI reported strong revenue growth of 150% and the seventh consecutive quarter of 100%+ growth. The division’s momentum during the quarter was underscored by the triple-digit revenue growth in North America, and double-digit growth in EMEA, China and Asia Pacific geographies. Additionally, YOY profitability in all geographies also improved.