The Lenovo Group today announced record quarterly results, with historically high both profits and revenue, while the past quarter is the first that the Group announced revenue of $ 20 billion. The company’s focus on innovation and profitability, backed by operational excellence, has helped meet the industry’s wider supply challenges in the best possible way and has provided rapid growth and profitability to all of the Group’s business units worldwide.
Lenovo’s performance has improved significantly from year to year. Net income rose more than 50% for the 6th consecutive quarter, with the 3rd quarter rising 62% year-on-year to $ 640 million. The net profit margin improved by almost one unit, bringing closer the Group’s goal of doubling it in three years. Pre-tax revenue reached a record $ 855 million, up 45% year-on-year, while the Group’s revenue continued its strong growth trajectory, reaching a record $ 20.1 billion, up 17% year-on-year. per year.
Lenovo continues to invest heavily in innovation, with quarterly R&D spending rising 38% year-on-year as part of the company’s broader commitment to double R&D investment within three years. The investments are aimed at transforming Lenovo into a solutions and services company, developing technologies focused on the “New IT” architecture of “Client-Edge-Cloud-Network-Intelligence”. In the future, the company will remain focused on its 3S strategy (Smart devices / IoT, Smart Infrastructure, Smart Verticals) utilizing continuous opportunities for sustainable development and profitability improvements in all areas of the business, in order to maintain its successful trajectory towards double-digit increase in its net profit margin, by the end of the financial year 2023/2024.
Hang Seng Indexes Company Limited announced last week that from March 7, 2022, Lenovo will be listed on the Hang Seng Index – Hong Kong Stock Index.
Statement by the President and CEO – Yuanqing Yang:
“Lenovo has continued to seize the opportunities of accelerating digital and smart transformation, while the new New IT architecture has prepared us to meet the challenges with the ‘client-edge-cloud-network-intelligence’ capabilities it offers. Another quarterly record, we achieved for the 6th consecutive quarter, an increase of more than 50% of our net income (from year to year), but also the 1st quarter in our history which recorded revenues of 20 billion US dollars. to double both our net profit margin and R&D investment in three years, from FY20 / 21 levels. ” “Once again, we have shown that Lenovo’s innovation, transformation strategy and excellence can deliver steady profitability growth for the future,” said Yuanqing Yang, President and CEO of Lenovo.
Solutions and Services Group (SSG): strong growth and high profit margins – increase overall profitability for the Group
The opportunity:
The Solutions and Services business unit continues to record strong profitability and growth in a rapidly growing market. As technology architecture becomes more sophisticated, customers demand sophisticated IT services in a market projected to be worth more than $ 1 trillion by 2025. This includes higher demand for premier support, as well as customized employee orders. almost half of whom work remotely.
Q3 Yield:
Significant increase in revenue for the 3rd quarter (25% on an annual basis that amounted to 1.5
billion US dollars), yielding 7.1% of the Group’s total revenue and with an operating margin of more than 22%, equal to an increase of almost three units from year to year.
• Support services recorded a 21% increase in revenue on an annual basis.
Managed Services saw a 50% year-on-year improvement in revenue due to the Lenovo TruScale as-a-Service model announced last quarter. Innovations in Smart Retail have helped Project Services and Solutions increase revenue by 23% year-over-year.
Future plans:
• Lenovo will continue to take advantage of significant market opportunities to increase its revenue, but also higher profitability. Starting point is the increase in distance-work, where Lenovo will leverage its global service network to help increase employee productivity through its top-of-the-line support for as-a-Service and other digital solutions. solutions for the home office.
• In managed services, Lenovo will continue to invest in Lenovo TruScale solutions, hybrid cloud solutions, as well as additional software and services based on the company’s IP.
• The company will also further expand customer viability solutions, such as data recovery service, and the recent expansion of carbon offset service.
Infrastructure Solutions Group (ISG): achieving profitability and strong growth
The opportunity:
Opportunities continue to grow for the ISG business unit as ICT infrastructure modernization expands worldwide. The ICT infrastructure market is expected to reach $ 250 billion by 2025.
At the same time, the edge infrastructure market is expected to exceed US $ 41 billion.
Q3 Yield:
• The ISG business unit achieved record performance, marking its first profitability since the acquisition of IBM x86 in 2014. Revenue rose 19% year-over-year to $ 1.9 billion. It is worth noting that this was the 4th consecutive quarter that revenues increased by double digits.
• The ISG business unit has surpassed the market in almost every field. Cloud Service Provider revenue increased by 38% year-on-year, while business / SMB revenue improved by 7% year-on-year.
Future plans:
• Lenovo will take advantage of the fact that it can meet the needs of all customer categories (CSP of different scales, Enterprise, SMB) as an advantage to balance profitability, but also to meet the requirements of its customers for security, reliability and flexibility .
• Investments will continue to focus on fast-growing market segments, such as Edge computing.
Intelligent Devices Group (IDG): strong revenue growth and stronger profitability, emphasis on non-computer products.
The opportunity:
The smart device market continues to benefit from the “new reality” of business hybrid operation. The computer market is projected to remain strong and stable, with an emphasis on commercial and premium products. In smartphones, the reshuffle and changes in the market will bring more growth opportunities to Lenovo. 5G penetration and the development of New IT with “edge-cloud-network-intelligence” will offer more development capabilities for new, smart devices with embedded computing / IoT, AR / VR (which will see a big increase due to metaverse) , as well as more solutions for the smart home and smart collaborations.
Q3 Yield:
• Outstanding results with revenue growth of 16% year on year, amounting to US $ 17.6 billion, with even greater profitability (21% on annual basis) amounting to US $ 1.4 billion.
• Premium PCs grew rapidly, with revenue from workstations and gaming increasing by 40% and 27% respectively, from year to year.
• Smartphones recorded healthy profits for the seventh consecutive quarter, with revenue increasing by 46% year on year. Equivalent to the record high of the last quarter, the profits of Smartphones amounted to 89 million US dollars. Rapid growth was observed in key markets, with revenues in Latin America increasing by 25% year-on-year and revenues in North America more than doubling from year to year (133%).
• In terms of emerging categories of smart devices, revenues from smart collaboration solutions have almost doubled from year to year.
Future plans:
Lenovo will further invest in innovation, premium market segments, but also core components to increase profitability and balance sales prices. At Mobile, we will further strengthen our portfolio and invest in expanding into new markets in Europe and Asia-Pacific. We will also continue to invest in non-computer products such as IoT, metaverse, smart home and smart collaboration solutions, to take advantage of emerging opportunities and further increase our product range.
Investments for the future
Lenovo continues to focus heavily on ESG and sustainable development in all its operations – from the use of innovative recycled materials in products such as the ThinkPad Z series launched in January 2022, to the use of neutral carbon for cargo shipments.
In addition, Lenovo has recently received significant recognition for its actions and commitments to the ESG, such as:
Named one of the companies with the best sustainability program in the world by Corporate Knights
Secured a place on the famous ‘A List’ for tackling water safety by the global, non-profit organization CDP
• Earned a score of 100/100 in the 2022 Corporate Equality Index 2022
• Its actions in the Bloomberg Gender Equality Index were recognized Bloomberg Gender Equality Index
Announced as a company with a leading position in diversity from the Financial Times for 2022 (Financial Times 2022 leaders in diversity)
Fortune’s Most Admired Companies in the list of 2022
Win gold at Hong Kong Institute of Certified Public Accountants Best Corporate Governance and ESG Awards 2021
Source: Capital
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