Lenovo Group reported results for its first fiscal quarter ended June 30, 2011, and for the seventh consecutive quarter, Lenovo grew faster than any of the top five PC manufacturers, helping the Company to become the world’s third largest PC vendor in total shipments.
During the first quarter, Lenovo’s worldwide PC shipments grew 23.1 percent year-over-year. Comparatively, industry PC shipments increased just 2.7 percent worldwide for the same period, marking the ninth quarter in a row that Lenovo has grown faster than the industry.
Consolidated sales for the first fiscal quarter increased 15 per cent year-over-year to a record of $5.9 billion. The Company’s gross profit for the quarter increased 41 percent year- over-year, with gross margin at 12.5 percent. Operating profit for the quarter grew 51 percent year-over year to $123 million.
For the fiscal quarter, Lenovo reported a pre-tax income of $123 million, a 64 percent jump year-over-year. Profit attributable to equity holders for the quarter was $108 million, increased 98% year-over-year. Basic earnings per share for the first fiscal quarter were 1.11 US cents, or 8.63 HK cents. Net cash reserves as of June 30, 2011, totaled $3.6 billion.
In June 2011, Lenovo announced its acquisition of Medion AG, a leader in PC, multimedia products, mobile communications service and consumer electronics in Germany. The acquisition will double Lenovo’s market share in Germany and make it the second-largest PC Company in Europe’s largest PC market. The Medion deal will also help fuel Lenovo’s expansion in consumer PCs and the high-growth mobile Internet market.
Lenovo also completed the formation of the joint venture company with NEC Corporation, forming the largest PC group in Japan. This joint venture makes Lenovo the number one PC vendor in two out-of-the three largest PC markets in the world.
“The Board is very satisfied with Lenovo’s first quarter results. Since we adjusted our leadership team in early 2009, our business continues to climb and everything has been executed well according to our original plans,” said Lenovo Chairman Liu Chuanzhi. “Lenovo has an outstanding leadership team, the right approach to developing strategies, and strong execution capabilities, demonstrated by our performance this quarter. Our results show that Lenovo’s acquisition of the IBM PC business has become a success. In future quarters, you will see clearly that we will take what we’ve learned from this acquisition and apply that knowledge towards our joint venture with NEC in Japan and our acquisition of Medion in Germany.”
“The solid execution of the successful “Protect and Attack” strategy fueled Lenovo’s strong performance in the past fiscal quarter that we have achieved record high in global shipments, revenue as well as global market share. At the same time, we outperformed the industry in all geographies, customer segments and product segments,” said Yang Yuanqing, Lenovo CEO. “Over the past two years, we have placed emphasis on and invested significantly in our business growth. Our global market share has now reached double-digits and we have attained a double-digit share in a greater number of our strategic markets. Starting this year, we are advancing to a more balanced strategy of continuing to grow, while shifting our focus more on profitability.”
Consolidated sales for Lenovo’s laptop PC business worldwide in the first fiscal quarter totaled $3.5 billion, an increase of 14 percent year-over-year. Consolidated sales of Lenovo Desktop PCs worldwide increased 18 percent year-over-year in the first fiscal quarter to $2 billion, or 34.1 percent of Lenovo’s total sales revenue. Desktop shipments for the same period increased 23 percent across the industry.