• The Group will continue to increase investments in fast-growing segments such as Edge computing, hybrid cloud solutions, and 5G cloud-network convergence.
• The Group will also continue to strengthen in-house design and manufacturing capabilities to drive profitability improvements as the business moves towards breakeven and beyond.
• The vision remains to become the largest and most trusted global ICT infrastructure solutions provider.

Intelligent Devices Group (IDG): strong revenue growth and stronger profitability, increasing contribution from non-PC businesses

Opportunity:

The demand for PCs and other smart devices remains strong. This is driven by commercial demand recovering, with market reports showing commercial PCs (excluding Chromebooks) growing 18% year-on-year last quarter, as well as increased demand expected from the launch of Windows 11. Lenovo expects PC demand to be in line with industry assessments of 340-355 million units a year for the next few years. The global smartphone market still presents tremendous opportunities to grow, as does the surging IoT market which is expecting to grow by 11% CAGR through 2025.

Q2 performance:

• Excellent results with revenue growth of 21% year-on-year to US$15.3 billion, with even stronger profitability growth - up 34% year-on-year to US$1.2 billion, on already high base.
• Premium PC segments delivered high growth with premium Yoga and workstation revenue each more than doubling year-on-year. Commercial PC revenue grew 29% year-on-year and SMB PC grew 48% year-on-year.
• Smartphones had its best quarter ever, with profit reaching a new historic high of US$89 million, while revenue grew 27% year-on-year to the highest in 15 quarters. All geographies delivered high profitable growth – not only in the traditional strongholds of Latin America and North America, but also expansion markets of EMEA and Asia Pacific. Tablet revenue grew 20% year-on-year and accessories business grew 31% year-on-year.

Looking ahead:

• Lenovo will further invest in premium segments to drive increased profitability and average selling price. Adjacent non-PC products like smartphones, tablets, smart meeting collaboration, and embedded computing will further increase the non-PC business mix.

Operational highlights and investing for the future

• The Group continues to focus significantly on ESG through all its operations; setting new climate change mitigation goals in August 2021 as part of its annual ESG report. The company has committed to removing one million tons of Green House Gas emissions from its supply chain by FY2025/26 as it makes progress toward its 2030 emissions reductions goals, approved by the Science-Based Targets Initiative. In addition, the company has committed to integrating post-consumer recycled materials into 100% of PC products by 2025 and reframed reset social impact goals so that women will account for 27% of global executive roles by 2025, up from 21% in 2020.
• The Group was recently recognized for its commitments and work across ESG, receiving its highest ever rating from the Hang Seng Corporate Sustainability Index, reaching an AA+ rating for the first time and the best overall technology industry score.
• Following the retirement of Corporate President and Chief Operation Officer Gianfranco Lanci, Lenovo recently announced Che Min (Jammi) Tu as Group Operations Officer of the company. In his role he will build on the company’s strengths in operational and supply chain excellence.

About Lenovo

Lenovo (HKSE: 992) (ADR: 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.