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

  • Lenovo continues transformation from single PC hardware company into multi-business innovator in smart devices, data centers, Internet of Things (IoT) and Artificial Intelligence
  • Q4 revenue of US$10.6 billion was up 11% YTY, the first double-digit increase in 10 quarters
  • Group Q4 PTI up sharply to US$37 million versus US$15 million last year; group operational performance improved US$255 million year-on-year
  • Q4 net income was US$33 million
  • Year-on-year growth with overall FY revenue up 5% to US$45.3 billion
  • Personal Computer Group, Smart Devices, Mobile Business fully combine into new, ‘Intelligent Devices Group’

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

  • Lenovo continued to execute on its three-wave strategy, emphasizing leadership in core businesses, growth in key segments and investment in emerging technologies. All three of Lenovo’s key business groups demonstrated strength and momentum in both the fourth quarter and fiscal year
  • Personal Computers and Smart Devices (PCSD) reported US$7.7 billion in FYQ4 revenue, up 16% from the same period a year earlier and the highest growth in four years. For the year, PCSD reported US$32.4 billion, up 8% from FY2016/17
  • The Data Center Group (DCG) revenue grew 44% during the quarter compared to Q4 FY2016/17 to US$1.2 billion. For the year, DCG reported US$4.4 billion in revenue, up 8% from FY2016/17
  • The Mobile Business Group (MBG) revenue for Q4 FY2017/18 was US$1.3 billion and for the full year was US$7.2 billion. Lenovo remains optimistic that aggressive cost-cutting and exceptionally strong performances by MBG in Latin America (volume grew 40% year-on-year for the full year), or more than 20 times the industry) and North America (volume +57% year-on-year for the full year) are expected to yield substantially improved results as FY2018/19 continues

“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

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