Lenovo Group announced the results for its fourth fiscal quarter and full fiscal year ended March 31, 2018. For its fourth fiscal quarter FY2017/18, Lenovo reported USD 10.6 billion in revenue, up 11 percent year-on-year, the first double digit increase in 10 quarters.
In the fourth fiscal quarter Lenovo’s group pre-tax income was USD 37 million, up 143 percent year-on-year. For the full fiscal year, the company’s overall revenue was over USD 45.3 billion, up 5 percent year-on-year. Group operational performance reached USD 193 million, improving by USD 96 million. The company recorded a USD 189 million net loss for the full year mainly due to a one-time non-cash write-off charge of USD 400 million from deferred income tax assets in Q3 FY2017/18.
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 USD 7.7 billion in FYQ4 revenue, up 16 percent from the same period a year earlier and the highest growth in four years. For the year, PCSD reported USD 32.4 billion, up 8 percent from FY2016/17.
- The Data Center Group (DCG) revenue grew 44 percent during the quarter compared to Q4 FY2016/17 to USD 1.2 billion. For the year, DCG reported USD 4.4 billion in revenue, up 8 percent from FY2016/17.
- The Mobile Business Group (MBG) revenue for Q4 FY2017/18 was USD 1.3 billion and for the full year was USD 7.2 billion. Lenovo remains optimistic that aggressive cost-cutting and exceptionally strong performances by MBG in Latin America (volume grew 40 percent year-on-year for the full year), or more than 20 times the industry) and North America (volume +57 percent 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
PC and Smart Devices (PCSD) business group: During the fourth quarter, PCSD posted strong revenue growth of 16 percent compared to the same period a year earlier. For the year, PCSD reported an 8 percent increase in revenue, and remained the world’s #1 PC and Tablet maker, with market share growing 0.2 points to 15.6 percent globally. Additionally:
- Returned to industry-leading PTI margin of 5 percent in Q4 FY2017/18. All geographies continued to be profitable with margin expansion in four out of five.
- Strong, double-digit, year-on-year revenue growth across regions in the Americas, Asia Pacific, and EMEA.
- Focused strategy in high-growth segments paying off with strong double-digit shipment growth year-on-year in both Gaming (+42 percent) and Workstation (+32 percent) in FYQ4. Both surpassed the USD 1 billion scale in FY2017/18 with gaming reporting double-digit revenue growth year-on-year.
- Named Best Laptop Brand 2018 by LAPTOP Magazine for a second consecutive year.
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:
- In Q4 FY2017/18 delivered second consecutive quarter of double-digit year-on-year growth and achieved highest revenue growth (+44 percent) since the IBM System x acquisition in 2014 – with all geographies showing positive year-on-year revenue growth.
- North America and EMEA posted their fourth consecutive quarter of strong year-on-year revenue growth.
- Software Defined Infrastructure (SDI) continued strong revenue growth, 130 percent year-on-year.
- HPC solidified the number two position globally in the top 500 Supercomputing list, fast closing the gap to number one player.
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.
- In Q4 FY2017/18 Latin America remained the strong core for MBG, recording double-digit (13 percent) year-on-year revenue growth.
- In North America, shipments continued to show strong, year-on-year growth as Lenovo strengthened presence with mainstream models and carrier expansion. North America shipments grew 54 percent year-on-year for Q4 and gained 1.1 pts of market share to 3.8 percent in Q4 FY2017/18.
- Expense reduction for the new fiscal year as part of a strategy to reduce loss and focus on strengthening MBG’s leading position and profitability in Latin America, North America and Western Europe by simplifying the portfolio, optimizing the cost structure and leveraging shared platforms.
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.