Business Wire

Lenovo Group: First Quarter Results 2021/22

Share

Lenovo Group (HKSE: 992) (PINK SHEETS: LNVGY) today announced record fiscal first quarter results for the Group. Opportunities created by accelerated digitalization, intelligent transformation and IT upgrades in devices, infrastructure, and applications around the world continue to fuel the Group’s long-term and sustainable profitability increases.

Seizing these opportunities, Lenovo’s performance delivered significant year-on-year profitability improvements, with pre-tax income almost doubling to US$650 million (up 96%), and net income also more than doubled (up 119%), as net income margin reached 2.8%, the highest in many years. First quarter Group revenue continued hypergrowth to US$16.9 billion, up 27% year-on-year.

Looking ahead, the company sees continued opportunities for sustainable growth and profitability improvements across its business, in areas such as vertical solutions, infrastructure solutions, premium PCs, and adjacent non-PC devices such as tablets, smartphones, embedded computing, and other smart devices. Additionally, innovation will continue to help drive profitable, sustainable growth. Having increased R&D expense in the first quarter by 40% year-on-year, Lenovo will further invest in innovation and double its R&D investments over the next three years.

This quarter is the first time the company is reporting under the new business group structure of Solutions and Services Group (SSG), Infrastructure Solutions Group (ISG), and Intelligent Devices Group (IDG) that was announced earlier this year.

Financial Highlights:

 

Q1 21/22

US$ millions

Q1 20/21

US$ millions

Change

 

Group Revenue

16,929

13,348

27%

Pre-tax income

650

332

96%

Net Income (profit attributable to equity holders)

466

213

119%

 

Basic earnings per share (US cents)

4.02

1.80

2.22

Chairman and CEO quote – Yuanqing Yang:

“The accelerated digital and intelligent transformation has created significant market opportunities globally. Lenovo is successfully seizing these as we transform from a device company to a services and solutions provider. The proof is in our performance - this quarter alone we’ve doubled profitability year-on-year while net income margin reached the highest in many years,” said Yuanqing Yang, Lenovo Chairman and CEO. “Going forward, we will continue to increase R&D investment, aiming to double it over the next three years; we will further improve our operational excellence; and we remain committed to green innovation and corporate citizenship to achieve long-term sustainable profitability increases.”

Solutions and Services Group (SSG): driving increased Group profitability in rapid growth sectors

The industry is transforming with customers needing more sophisticated IT services, creating huge opportunities for solution services and managed services, including the subscription-based as-a-Service model. It’s estimated that the IT services market will be worth over US$1 trillion through 2025.

Q1 performance:

  • Significant Q1 revenue growth (38% year-on-year to US$1.18 billion) across three key segments of SSG (support services, managed services/as-a-Service, vertical solutions) with an operating margin of 22%, much higher than the traditional hardware businesses.
  • Support services profitability was up almost three points year-on-year; revenue from managed service/as-a-Service achieved double-digit growth year-on-year, and contract value for vertical solutions achieved triple digit growth year-on-year.
  • Success has come from several new high profile smart city and smart retail deals, as well as hybrid cloud solutions using Lenovo IP.

Looking ahead:

  • Against this backdrop, Lenovo will improve penetration rates for support services and leverage the increasing device install base, especially as the commercial sector rebounds to growth. For as-a-Service the company is aggressively investing in capabilities, platforms, and tools, as well as driving scale through building more repeatable vertical solutions using Lenovo’s own IP and through strategic partnerships.
  • The significantly higher margins of the three key segments for SSG will drive higher profitability for the Group overall in the quarters and years to come.

Infrastructure Solutions Group (ISG): accelerating profitability and significantly outgrowing the market quarter after quarter

ICT infrastructure is the foundation to digital and intelligent transformation, with ICT infrastructure predicted to be a near US$250 billion market through 2025. After investing in building a strong foundation, Lenovo is well positioned as a “full-stack” ICT provider.

Q1 performance:

  • ISG delivered record revenue of US$1.8 billion, has outperformed the market for six straight quarters, while achieving the best results in five years.
  • Now #3 in the global x86 Server market and #2 in mainstream storage.
  • Higher margin businesses – storage, software, and Hybrid Cloud solutions – continue strong growth year-on-year, with Hybrid Cloud Solutions growing high double-digit year-on-year.

Looking ahead:

  • The Group will continue to invest to grow the business with a vision to become the largest data center infrastructure solutions provider, by increasing investments in edge computing, Hybrid cloud solutions, and 5G cloud-network convergence. The company will continue to strengthen in-house design and manufacturing capabilities, improve efficiencies, and expand strategic partnerships to enable more solutions.
  • Ongoing investment in overall ISG competitiveness will further drive profitability and overall competitiveness for the business group.

Intelligent Devices Group (IDG): record profit, further growing non-PC businesses

The pandemic has changed how people live and work, with PCs returning to the center of digital lives. The PC refreshment cycle has shortened, the penetration rate has increased and the total PC demand until 2025 will at least remain at current levels, with commercial demand rebounding quickly. At the same time, the IoT market is expected to surge by 11% CAGR through 2025. And new opportunities in non-PC businesses are growing rapidly.

Q1 performance:

  • Record first quarter for both profit and revenue. Profit of US$1.1 billion, up 43% year-on-year and revenue of US$14.7 billion, up 28% year-on-year - driven by a combination of strong performance in PCs and growing performance of non-PC segments, which now account for 18% of IDG’s total revenue.
  • Average Selling Price and profitability continue to trend up, thanks to ongoing investment in premium and high growth PC segments like Gaming, Workstation, Thin & Light.
  • Lenovo strengthened its #2 position in the global Android tablet market, and the smartphone business delivered over 60% revenue growth year-on year and is now a self-sustainable healthy business, with record operating margin for the quarter of almost 5%.

Looking ahead:

  • Lenovo will further invest in smarter devices, core component technologies, and next generation computing platforms.
  • Lenovo will leverage its broad customer base to cross sell non-PC products, to drive sustainable profitability increases.

Operational highlights and investing for the future

  • Q1 R&D expense increased 40% year-on-year, with a commitment to double R&D investment over the next three years.
  • The company recently climbed 65 places to be ranked #159 on the Fortune Global 500 list, an all-time high ranking
  • The Group’s operational excellence and global supply chain continue to be best-in-class, helping the business to navigate ongoing global component supply challenges.
  • The Group continues to focus across ESG, through both its science-based climate targets and by driving green innovation; supporting communities and businesses in need as a result of COVID challenges, and empowering under-represented communities with access to technology and STEM education through the Lenovo Foundation. The Group’s annual ESG report will be published in September 2021. Lenovo has also recently been named best workplace for disability inclusion by the Disability:IN 2021 equality index.

About Lenovo

Lenovo (HKSE: 992) (PINK SHEETS: LNVGY) is a US$60 billion revenue Fortune Global 500 company serving customers in 180 markets around the world. Focused on a bold vision to deliver smarter technology for all, we are developing world-changing technologies that power (through devices and infrastructure) and empower (through solutions, services and software) millions of customers every day and together create a more inclusive, trustworthy and sustainable digital society for everyone, everywhere. To find out more visit https://www.lenovo.com and read about the latest news via our StoryHub.

 

 

 

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter ended June 30, 2021

(in US$ millions, except per share data)

 

 

 

 

 


Q1 21/22


Q1 20/21


Y/Y CHG

Revenue

 

16,929

13,348

27%

Gross profit

 

2,824

2,041

38%

Gross profit margin

 

16.7%

15.3%

1.4 pts

Operating expenses

 

(2,081)

(1,605)

30%

Expenses-to-revenue ratio

 

12.3%

12.0%

0.3 pts

Operating profit

 

743

436

70%

Other non-operating expenses - net

 

(93)

(104)

(11)%

Pre-tax income

 

650

332

96%

Taxation

 

(165)

(85)

94%

Profit for the period

 

485

247

97%

Non-controlling interests

 

(19)

(34)

(44)%

Profit attributable to equity holders

 

466

213

119%

EPS (US cents)

 

 

 

 

Basic

4.02

1.80

2.22

Diluted

3.53

1.76

1.77

 

To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.

Contact information

Press Contacts
Hong Kong – Angela Lee, angelalee@lenovo.com, +852 2516 4810
London – Charlotte West, cwest@lenovo.com, +44 7825 605720
Zeno Group - LenovoWWcorp@zenogroup.com

About Business Wire

For more than 50 years, Business Wire has been the global leader in press release distribution and regulatory disclosure.

Subscribe to releases from Business Wire

Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.

Latest releases from Business Wire

PMI Calls for Science-Based Discourse on Smoke-Free Alternatives27.9.2021 11:03:00 EEST | Press release

Misinformation threatens progress toward a smoke-free future, reveals a new international survey released today by Philip Morris International Inc. (PMI) (NYSE: PM). Well-funded groups continue to promote false narratives and spread confusion even as societal support increases for smoke-free alternatives that are scientifically substantiated to be a better choice for adults than continued smoking. The survey—fielded among nearly 30,000 adults in 26 countries by independent research firm Povaddo and commissioned by PMI—reveals that too many adult smokers remain unaware that better alternatives to cigarettes exist, are unable to access them, or are confused by false or misleading information that prevents them from making an informed choice. There is clear public demand for a collective review of the facts and science about smoke-free products. Nearly eight in 10 respondents (79%) agree that adult smokers who would otherwise continue using cigarettes should have access to and accurate in

VFMCRP announces approval for TAVNEOS® (avacopan) for the treatment of ANCA-associated vasculitis in Japan27.9.2021 09:02:00 EEST | Press release

Vifor Fresenius Medical Care Renal Pharma (VFMCRP) today announced that Japan’s Ministry of Health and Labor Welfare (MHLW) has granted its partner, Kissei Pharmaceutical Co., Ltd., marketing authorization approval for TAVNEOS® for the treatment of patients with granulomatosis with polyangiitis (GPA) and microscopic polyangiitis (MPA), the two main types of ANCA-associated vasculitis, a rare and severe autoimmune renal disease with high unmet medical need. “We are delighted that TAVNEOS® has been approved in Japan, the first market worldwide, and congratulate our partner Kissei for this significant milestone,” said Abbas Hussain, CEO of Vifor Pharma Group. “ANCA-associated vasculitis is officially designated an intractable disease in Japan, indicating a rare disease without any effective treatment but for which long-term treatment is required. There is significant unmet medical need of over 10,000 patients in Japan, and we believe in the potential of TAVNEOS® for treating it. We are co

BIOCORP and NOVO NORDISK Sign Global Partnership Within Diabetes on Digital Health27.9.2021 07:45:00 EEST | Press release

Regulatory News: BIOCORP (Paris:ALCOR) (FR0012788065 – ALCOR / Eligible PEA PME), a French company specialized in the design, development, and manufacturing of innovative medical devices, today announces an agreement with Novo Nordisk, a world leader in diabetes care, for the development and distribution (pending successful development) of a Mallya smart add-on device for the Novo Nordisk FlexTouch pen used by people with diabetes. Mallya is a Bluetooth enabled smart add-on device for pen injectors that collects dose and time of each injection and transfers information in real time to a companion software. Mallya helps people with diabetes maintain a reliable dose log, using technology to help improve understanding and allowing people to dose with confidence. Most Novo Nordisk's insulins are offered with the FlexTouch pen, and it is part of the launch map for all new insulins. A specific version of Mallya will be developed for FlexTouch, the first prefilled insulin delivery device with

New Study Evaluates the Feasibility of Using Masimo EMMA® Capnography on Mechanically Ventilated Neonates27.9.2021 02:00:00 EEST | Press release

Masimo (NASDAQ: MASI) today announced the findings of a study published in the European Journal of Pediatrics in which Dr. Masashi Hotta and colleagues at the Osaka Women’s and Children’s Hospital in Japan found that the Masimo EMMA® Portable Capnograph “may be considered an effective monitoring device” for mechanically ventilated preterm infants (neonates).1 This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210926005040/en/ Masimo EMMA® (Photo: Business Wire) Noting the importance of maintaining an appropriate range of partial pressure of arterial carbon dioxide (PaCO2) in preterm infants, especially while undergoing mechanical ventilation in the neonatal intensive care unit (NICU), the researchers sought to evaluate whether noninvasively monitoring end-tidal carbon dioxide (EtCO2) with EMMA could help clinicians maintain neonatal PaCO2 in the delivery room. They chose EMMA not only because of its portability but because it of

Spirit of Wipro Run Brings Together Participants From Over 35 Countries26.9.2021 15:57:00 EEST | Press release

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO), a leading global information technology, consulting and business process services company, today organized the 16th annual ‘Spirit of Wipro’ (SOW) Run, drawing thousands of participants from over 35 countries to run together in spirit. For the past sixteen years, Wiproites around the world have come together to celebrate Wipro’s core values. The annual SOW run aims to inspire employees to be responsible citizens of the world. This year’s theme was “Together. To greatness,” inspired by the resilience demonstrated by Wiproites in a year of unprecedented disruption. Along with outperforming across all business parameters, Wipro teams have remained committed to supporting their colleagues and creating a lasting social impact across communities. Like last year, this year’s race was also virtual, and runners strictly adhered to the local COVID-19 guidelines and safety protocols while participating in the event. Even under these conditions,

Pencil Lab Inks Debut in ADIHEX 202125.9.2021 13:04:00 EEST | Press release

The 18th edition of the Abu Dhabi International Hunting and Equestrian Exhibition (ADIHEX) on September 27 - October 3 marks an opportune platform for Pencil Lab Design Studio’s first major participation in the massive event, the largest of its kind in the Middle East and Africa. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210925005016/en/ Pencil Lab Inks Debut in ADIHEX 2021 (Photo: AETOSWire) Featuring more than 800 brands and companies, the event is held under the theme of ‘Sustainability and Heritage… A Reborn Aspiration’, highlighting heritage, culture and authentic sports and their strong relation with Arab history. As part of its inaugural participation in a major exhibition as a company, Pencil Lab, a UAE initiative, will showcase their artworks with three large oil paintings by Pencil Lab’s citizen artist, to highlight the strong connection of arts, like painting and photography, to Arab history and civilization.

DXC Technology Completes Refinancing Actions24.9.2021 23:30:00 EEST | Press release

DXC Technology Company (NYSE: DXC) (“DXC”) today announced the completion of its refinancing. DXC previously completed the offering of €1.35 billion Senior Notes priced on September 2, 2021 and $1.35 billion Senior Notes priced on September 7, 2021. DXC completed redemption of $2.5 billion principal of (i) EUR term loan in the amount of €400 million due FY23 and FY24, (ii) $500 million 4.25% Senior notes due FY25, (iii) £250 million 2.75% Senior notes due FY25, (iv) $467 million 4.125% Senior notes due FY26, (v) $500 million 4.75% Senior notes due FY28, and (vi) $234 million Senior notes due FY30. The applicable make whole premium for these redemptions was $300 million and accrued and unpaid interest was $40 million. Ken Sharp, Chief Financial Officer, DXC commented: “Our opportunistic debt refinancing of $2.5 billion of our high coupon debt further solidifies our financial foundation by extending our debt maturities, lowering our maturity towers and reducing our ongoing interest expen

In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.

Visit our pressroom