Lenovo Drives Strong Fourth Quarter and FY2017/2018 Results; Innovation and Efficiencies Power Continued FY2018/2019 Improvement
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Lenovo Drives Strong Fourth Quarter and FY2017/2018 Results; Innovation and Efficiencies Power Continued FY2018/2019 Improvement

HONG KONG — (BUSINESS WIRE) — May 23, 2018Lenovo Group (HKSE: 0992) (PINK SHEETS: LNVGY) today announced results for its fourth fiscal quarter and full fiscal year ended March 31, 2018. For its fourth fiscal quarter FY2017/18, Lenovo reported US$10.6 billion in revenue, up 11% year-on-year - the first double digit increase in 10 quarters - demonstrating solid performance momentum.

In the fourth fiscal quarter Lenovo’s group pre-tax income was US$37 million, up 143% year-on-year from US$15 million. The company also improved profitability in all three key businesses for the quarter year-on-year, with group operational performance1 improving US$255 million year-on-year to US$76 million. Profit attributable to shareholders for Q4 was US$33 million, lower than the same period last year due to a larger tax credit recorded in FY2016/17.

For the full fiscal year, the company’s overall revenue was over US$45.3 billion, up 5 % year-on-year. Group operational performance reached US$193 million, improving US$96 million year-on-year. The company recorded a US$189 million net loss for the full year mainly due to a one-time non-cash write-off charge of US$400 million from deferred income tax assets in Q3 FY2017/18.

Basic earnings per share in the fourth fiscal quarter was 0.28 US cents or 2.19 HK cents, and for the full year basic loss per share was 1.67 US cents or 13.05 HK cents. Lenovo’s Board of Directors declared a dividend of 2.61 US cents, or 20.5 HK cents per share for the fiscal year ended March 31, 2018.

Business Group Overview

“Last quarter, we resumed double-digit revenue growth with strong profitability improvement year-on-year, closing the fiscal year with a strong momentum and proving that Lenovo has truly entered a new phase of growth,” said Yang Yuanqing, Lenovo Chairman and CEO. “Lenovo’s vision has long been to become a global leader in intelligent transformation. We will focus on building competitiveness in Smart IoT devices, data center infrastructure and vertical intelligent solution, and we are well positioned to take advantage of smart IoT and intelligence era.”

During the quarter Lenovo also announced the integration of its Personal Computer and Smart Devices Group with its Mobile Business Group, creating the Intelligent Devices Group (IDG). This new group will further fast-track the company’s innovation leadership and ambitions for growth across the full spectrum of smart devices. This new structure will create a number of efficiencies by leveraging shared global supply chain and services. IDG will also accelerate Lenovo innovation as communications and computing technologies come together under a single platform to better connect devices, users, applications and content.

ADDITIONAL BUSINESS GROUP HIGHLIGHTS

PC and Smart Devices (PCSD) business group: During the fourth quarter, PCSD posted strong revenue growth of 16% compared to the same period a year earlier. For the year, PCSD reported an 8% increase in revenue, and remained the world’s #1 PC and Tablet maker2, with market share growing 0.2 points to 15.6% globally. Additionally:

Data Center Group (DCG): The Data Center group is well positioned to provide the infrastructure for the smart IoT era and continues to be a significant growth business for Lenovo. The group’s financial performance serves as a tangible proof point that the DCG strategy is yielding significant results:

Mobile Business Group (MBG): During the quarter MBG moved with urgency to reshape the business for future growth and to accelerate progress toward profitability. This included the appointment of Sergio Buniac to lead the business outside of China; a realignment of the product portfolio ahead of forthcoming launches; overall channel inventory reduction, and a strategic market review to identify the opportunities for most profitable growth.

Lenovo Capital and Incubator Group: Lenovo continues to be a beneficiary and driver of some of the most robust trends in global technology innovation, notably artificial intelligence. Lenovo’s investment arm, Lenovo Capital and Incubator Group (LCIG), funded 85 companies during the past years, and oversaw eight independent spin-offs.

About Lenovo

Lenovo (HKSE: 992) (ADR: LNVGY) is a US$45 billion Fortune 500 company with a vision to become the global leader in Intelligent Transformation through smart devices and infrastructure that create the best user experience. Lenovo manufactures one of the world’s widest portfolio 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 next generation 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 different in everyone and build a smarter future where everyone thrives. Follow us on  LinkedInFacebookTwitterInstagramWeibo, or visit us at  http://www.lenovo.com/

         

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter and full year ended March 31, 2018

(in US$ millions, except per share data)

 
 
Q4 17/18

Q4

16/17


Y/Y CHG

FY17/18

Y/Y CHG
Revenue 10,638 9,579 11% 45,350 5%
Gross profit 1,544 1,368 13% 6,272 3%
Gross profit margin 14.5% 14.3% 0.2pts 13.8% -0.4pts
Operating expenses (1,443) (1,294) 11% (5,885) 8%
Expenses-to-revenue ratio 13.6% 13.5% 0.1pts 13.0% 0.4pts
Operating profit 101 74 36% 387 -42%
Other non-operating expenses- net (64) (59) 9% (234) 28%
Pre-tax income 37 15 143% 153 -69%
Taxation 12 89 -87% (280) N/A
Profit/(loss) for the period/year 49 104 -53% (127) N/A
Non-controlling interests (16) 3 N/A (62) N/A
Profit/(loss) attributable to equity holders 33 107 -69% (189) N/A

Earnings/(loss) per share (US cents)

 

Basic 0.28 0.97 (0.69) (1.67)

N/A

Diluted 0.28 0.97 (0.69) (1.67)

N/A

1 Operational performance is measured as profit before taxation, but excluding restructuring charges and disposal gains on properties

2 Source: IDC Quarterly Personal Computing Device Tracker, 2018Q1 Final Historical



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