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Lenovo Group: Second Quarter Results 2023/24

Lenovo sees signs of recovery across technology sector - delivers quarter-on-quarter performance improvements and further accelerates AI leadership

HONG KONG — (BUSINESS WIRE) — November 15, 2023Lenovo Group Limited (HKSE: 992) (ADR: LNVGY), together with its subsidiaries (‘the Group”), today announced second quarter results reporting Group revenue of US$14.4 billion and net income of US$273 million on a non-Hong Kong Financial Reporting Standards (HKFRS)[1] basis. Gross profit margin improved year-on-year to 17.5%, a record high for a second quarter. The Group’s diversified growth engines continued to deliver strong performance, with revenue from the non-PC businesses accounted for 40% of Group revenue, up three points year-on-year.

The Group is seeing clear signs of recovery across the technology sector, noting the strong execution of its strategy, operational excellence, and continuous investment in innovation as key contributors to its quarter-on-quarter performance improvements. Looking ahead, Lenovo will further leverage the opportunities created by AI, where it is uniquely positioned to succeed given its hybrid AI model, pocket- to-cloud portfolio, strong ecosystem and partnerships, and growing portfolio of AI technologies and capabilities. Its ongoing investment in innovation and in particular AI, will further bolster Lenovo’s ability to capture the exponential growth from AI and drive sustainable growth and profitability for the business. The Group is confident in its ability to resume year-on-year growth very soon.

Financial Highlights:

 

Q2 FY 23/24

US$ millions

Q2 FY 22/23

US$ millions

Change

 

Group Revenue

14,410

17,090

(16%)

Pre-tax income

358

710

(50%)

Net Income (profit attributable to equity holders)

249

541

(54%)

Net Income (profit attributable to equity holders – non-HKFRS) [1]

273

591

(54%)

 

 

 

 

Basic earnings per share (US cents)

2.09

4.54

(2.45)

Lenovo’s Board of Directors declared an interim dividend of 8.0 HK cents per share.

Chairman and CEO quote – Yuanqing Yang:

“Last quarter, despite macro challenges, we saw clear signs of recovery across the technology sector. Thanks to our strong execution, operational excellence, and continuous investment in innovation, we delivered consecutive quarter-on-quarter performance improvements, indicating an encouraging trajectory to recovery. With continuous execution of our intelligent transformation strategy, and with our AI ecosystem and partnership further strengthened, we will leverage our full-stack AI capabilities from pocket to cloud to enable hybrid AI applications for every enterprise and every individual, ultimately driving sustainable growth for our business.”

Accelerating AI leadership

AI is not new for Lenovo and has long been a focus of its digital and intelligent transformation strategy. The company outlined its vision of ‘AI for All’ at its annual Tech World innovation event in October, focusing in particular on its model for hybrid AI where public, private, and personal foundation models co-exist in order to enable AI for All, while respecting security and privacy. Lenovo’s vision included a rich smart device portfolio including AI-enabled PCs, smartphones, and tablets, as well as AI-ready and AI-optimized infrastructure, solutions, and services. Lenovo is uniquely positioned to capture the exponential growth from AI given its pocket-to-cloud portfolio, strong eco-system and partnerships (including an expansion of the company’s partnership with NVIDIA), and growing portfolio of AI technologies and capabilities.

Lenovo Chairman and CEO Yuanqing Yang was joined on stage at Tech World by leaders from Lenovo’s global partners, including NVIDIA Founder, President and CEO, Jensen Huang; AMD Chair and CEO, Dr. Lisa Su, and Formula 1® President and CEO, Stefano Domenicali. Microsoft Chairman and CEO, Satya Nadella, Qualcomm CEO and President, Cristiano Amon, and Intel CEO, Pat Gelsinger joined Tech World via video link.

As announced last quarter, Lenovo is committing a further US$1 billion in investment for AI-driven innovation that will not only ensure it can realize its vision for ‘AI for All’, but that it can drive sustainable growth for the entire business.

Solutions and Services Group (SSG): Record revenue and operating profit, accumulating AI solutions and services

Q2 FY23/24 performance:

Opportunities and Sustainable Growth:

Infrastructure Solutions Group (ISG): Tackling market headwinds, building hybrid AI infrastructure

Q2 FY23/24 performance:

Opportunities and Sustainable Growth:

Intelligent Devices Group (IDG): Solidifying market leadership, capturing AI device opportunities

Q2 FY23/24 performance:

Opportunities and Sustainable Growth:

ESG highlights

Lenovo has been recognized for several ESG achievements over the past quarter, including:

[1] non-HKFRS measure was adjusted by excluding net fair value changes on financial assets at fair value through profit or loss, amortization of intangible assets resulting from mergers and acquisitions, mergers and acquisitions related charges; and the corresponding income tax effects, if any.

About Lenovo

Lenovo is a US$62 billion revenue global technology powerhouse, ranked #217 in the Fortune Global 500, employing 77,000 people around the world, and serving millions of customers every day in 180 markets. Focused on a bold vision to deliver smarter technology for all, Lenovo has built on its success as the world’s largest PC company by further expanding into growth areas that fuel the advancement of ‘New IT’ technologies (client, edge, cloud, network, and intelligence) including server, storage, mobile, software, solutions, and services. This transformation together with Lenovo’s world-changing innovation is building a more inclusive, trustworthy, and smarter future for everyone, everywhere. Lenovo is listed on the stock exchange of Hong Kong under Lenovo Group Limited (HKSE: 992)(ADR: LNVGY). To find out more visit https://www.lenovo.com, and read about the latest news via our StoryHub.

 

 

 

LENOVO GROUP

 

FINANCIAL SUMMARY

For the quarter ended September 30, 2023

(in US$ millions, except per share data)

 

 

 

 

 


Q2 23/24


Q2 22/23


Y/Y CHG

Revenue

 

14,410

17,090

(16)%

Gross profit

 

2,522

2,877

(12)%

Gross profit margin

 

17.5%

16.8%

0.7 pts

Operating expenses

 

(2,008)

(2,026)

(1)%

R&D expenses

 

(498)

(556)

(10)%

(included in operating expenses)

 

 

Expenses-to-revenue ratio

 

13.9%

11.9%

2.0 pts

Operating profit

 

514

851

(40)%

Other non-operating income/(expenses) - net

 

(156)

(141)

11%

Pre-tax income

 

358

710

(50)%

Taxation

 

(69)

(156)

(56)%

Profit for the period

 

289

554

(48)%

Non-controlling interests

 

(40)

(13)

215%

Profit attributable to equity holders

 

249

541

(54)%

Profit attributable to equity holders- non-HKFRS [1]

 

273

591

(54)%

EPS (US cents)

 

 

 

 

Basic

2.09

4.54

(2.45)

Diluted

1.99

4.23

(2.24)

 



Contact:

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