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Lenovo Delivers Strong Performance with Highest Quarterly Revenue in Four Years and Record Pre-Tax Income

HONG KONG — (BUSINESS WIRE) — February 20, 2019Lenovo Group (HKSE: 0992) (Pink Sheets: LNVGY) today announced results for its third fiscal quarter ended December 31, 2018. Lenovo posted its highest group revenue in four years of US$14 billion, up 8.5% YOY (12.8% YOY excluding currency impact). The company reported strong pre-tax income of US$350 million (up 133% / +US$200 million over the previous year) - an all-time record for the company as all businesses continued to report profit improvements.

The Group recorded a net profit of US$233 million for the fiscal quarter, significantly improved from the net loss of US$289 million in the same quarter of last year. Basic earnings per share in the third fiscal quarter was 1.96 US cents or 15.35 HK cents.

“When we set out on our journey of Intelligent Transformation, our goal was to restore and then accelerate Lenovo’s business momentum, while providing our customers and partners with the best technologies in smart IoT, smart infrastructure and smart vertical solutions. We’ve done exactly that and more - our strength and position as the industry’s most prolific global technology organization is firmly established. What I’m most pleased to see is how Lenovo is bucking the current industry trend – we’re strong, have delivered record-breaking results this quarter and are only getting stronger”, said Yang Yuanqing, Lenovo Chairman and CEO.

Business Group Overview:

The Intelligent Devices Group (IDG) posted record revenue and profit; powered by its third straight quarter since inception of revenue growth - up 6.2% YOY to US$12.4 billion.

Lenovo’s Data Center Group (DCG) reported its fifth consecutive quarter of profit growth (PTI margin up 3.6 percentage points YOY) on a 31% YOY increase in revenue to US$1.6 billion. In fact, DCG recorded YOY revenue growth in all geographies, highlighted by triple-digit growth in North America, and double-digit growth in Asia-Pacific, EMEA and Latin America. The NetApp joint venture, which is now operational in China, will further strengthen the portfolio and expand business opportunities. Hyperscale once again served as a significant contributor with triple-digit revenue growth and Software Defined Infrastructure (SDI) revenue grew almost 70% YOY. The Group not only remained #1 on the TOP500 list of supercomputers globally, but also increased its lead. **

* IDC CY2018 Q4 Worldwide Quarterly Personal Computing Device Tracker
** Top500 List of Supercomputers, 52nd edition, Nov. 2018 https://www.top500.org/lists/2018/11/ with 140 of the top 500 supercomputers, 56 systems ahead of the nearest competitor

About Lenovo

Lenovo (HKSE: 992) (ADR: LNVGY) is a US$45 billion Fortune Global 500 company and a global technology leader in driving Intelligent Transformation through smart devices and infrastructure that create the best user experience. Lenovo manufactures one of the world’s widest portfolios of connected products, including smartphones (Motorola), tablets, PCs (ThinkPad, Yoga, Lenovo Legion) and workstations as well as AR/VR devices and smart home/office solutions. Lenovo’s data center solutions (ThinkSystem, ThinkAgile) are creating the capacity and computing power for the connections that are changing business and society. Lenovo works to inspire the difference in everyone and build a smarter future where everyone thrives. Follow us on LinkedIn, Facebook, Twitter, Instagram, Weibo, read about the latest news via our StoryHub, or visit our website at https://www.lenovo.com.

     

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter ended December 31, 2018

(In US$ millions, except per share data)

 
   

Q3 18/19

 

Q3 17/18

 

Y/Y CHG

Revenue   14,035     12,939     8 %
Gross profit   2,050     1,751     17 %
Gross profit margin   14.6 %   13.5 %   1.1 pts
Operating expenses   (1,616 )   (1,547 )   4 %
Expenses-to-revenue ratio   11.5 %   12.0 %   0.4 pts
Operating profit   434     204     112 %
Other non-operating expenses - net   (84 )   (54 )   55 %
Pre-tax income   350     150     133 %
Taxation   (85 )   (425 )   (80 %)
Profit/(loss) for the period   265     (275 )   N/A  
Non-controlling interests   (32 )   (14 )   125 %
Profit/(loss) attributable to equity holders   233     (289 )   N/A  
EPS (US cents)
Basic 1.96 (2.53 ) N/A
Diluted   1.92     (2.53 )   N/A  



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