-
Records in pre-tax income of US$246 million and earnings of US$205 million
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Record quarterly sales of US$9.4 billion
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Record 14.1 million PC shipments and record 15.9 percent global market share
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Basic EPS of 1.99 US cents, or 15.42 HK cents
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Net cash reserves of US$4.2 billion (as of December 31, 2012)
(
BUSINESS WIRE)-- Lenovo
Group today reported results for its third fiscal quarter ended December
31, 2012. In its best quarter ever, Lenovo continued to outgrow the
market in all geographies with record sales, pre-tax income and
earnings. Lenovo continued its push towards becoming the world’s leading
PC maker and emerging global leader in PC Plus devices, with another
quarterly sales record of $9.4 billion, an 12 percent year-over-year
increase.
For 13 consecutive quarters, Lenovo has been the fastest growing major
PC company. Lenovo was also recognized by IDC as the world’s third
largest maker of “smart connected devices,” such as tablets, PCs and
smartphones. At the same time, Lenovo had another quarter of record
pre-tax income at US$246 million, demonstrating that such rapid growth
is being achieved while profits increase.
Lenovo’s third quarter earnings were also a record at US$205 million,
an increase of 34 percent over the last year, with gross margin at 11.8
percent. Gross profit for the third fiscal quarter increased 15 percent
year-over-year, to US$1.1 billion, while operating profit for the third
quarter was US$243 million, a 26 percent increase year-over-year. Basic
earnings per share for the third fiscal quarter was 1.99 US cents, or
15.42 HK cents. Net cash reserves as of December 31, 2012, totaled
US$4.2 billion.
The Company’s ‘Protect and Attack’ strategy – protecting the two profit
pools of global commercial PC and the China businesses, while attacking
three high growth opportunities in emerging markets, global consumer
and PC Plus products, such as smartphones, tablets and smart TVs –
continued to deliver results. This quarter, Attack businesses delivered
50 percent of the Company’s revenues, a significant increase from four
years ago when the Company first launched the strategy and attack
revenues were 32 percent. Further demonstrating the Company’s balance,
its Mobile Internet and Digital Home (MIDH) revenues, which includes its
smartphone, tablet and smart TV businesses, accounted for a record 11
percent of Company revenue this quarter, up 77 percent year over year.
And for the first time, its smartphone business in China became
profitable.
During the third fiscal quarter, Lenovo’s worldwide PC shipments grew
7.9 percent to an all time high of 15.9 percent* marketshare, in a
difficult market that was down 7.8 percent year-over-year. This was the
15th quarter in a row the Company grew faster than the industry. Lenovo
gained share points in every geography and every product category and in
every respective customer segment.
While the Company’s organic growth continues to drive the majority of
its success, shareholders should note that Lenovo has closed the joint
venture and acquisitions announced in the previous two quarters,
including its strategic partnership with EMC that includes a joint
venture in EMC’s Iomega business; its acquisition of CCE, a leading
PC+company in Brazil, and its acquisition of Stoneware, a US-based cloud
computing company. Further, the Company reports that integration of all
mergers and acquisitions transactions announced in the last three years
are well on-track, and in many cases ahead of schedule.
Lenovo recently realigned its product development and supply chain
organizations to create two new groups: the Lenovo Business Group, which
will focus on mainstream PCs, mobile internet and digital home
products; and the Think Business Group, which will focus on
Think-branded products targeting high-end consumers and enterprises.
Today, Lenovo is twice as large and much more diverse than it was when
its existing structure was established over four years ago. That
structure was ideal in supporting Lenovo’s business when it was mostly
focused on its China PC and global commercial PC business. Today, the
Company has built strong consumer, mobile and emerging markets
businesses globally, so the change was proactively initiated to drive
continued performance across all of these businesses, stay ahead of
consumer demands, while driving speed, agility and innovation.
The recently concluded Consumer Electronics Show (CES) in Las Vegas
continued to show that innovation is a significant competitive advantage
and future growth driver for Lenovo. The Company was recognized with a
record 50 awards at CES, including several “Best in Show”
acknowledgments. A robust pipeline of innovative products including the
IdeaCentre Horizon - a 27-inch table top PC; ThinkPad Helix - Lenovo’s
latest convertible PC designed for business professionals; and the
Intel-powered, K900 smartphone are well positioned to continue to stoke
new customer demand and drive Lenovo’s performance.
"With the strong execution of our 'Protect and Attack' strategy, Lenovo
has not only achieved record revenue, profit and global PC market share
last quarter, but also our smartphone and tablet businesses have
delivered hyper growth. Even more, our worldwide tablet and China
smartphone businesses have become profitable," said Yang Yuanqing,
chairman and CEO, Lenovo Group. "As we continue into the PC Plus era,
Lenovo has already laid a solid foundation. Our new organization will
provide the structure to elevate our diversified business and drive it
to the next level. We are confident that we can win through
differentiation and will be the innovation leader in the PC Plus era."
GEOGRAPHIC OVERVIEW
-
Lenovo China achieved US$4.1 billion in consolidated
sales in the third fiscal quarter, an increase of 17 percent
year-over-year, accounting for 43 percent of the Company’s worldwide
sales. Lenovo’s PC Plus strategy fueled outstanding performance in China
with 83 percent MIDH revenue growth and a revenue contribution in China
of 22 percent. The Company achieved an important milestone with China
smartphone achieving profitability for the first time. Lenovo grew its
number-one PC market share position in China, the world’s largest PC
market, to 36.7 percent, up 1.4 points year-over-year. Lenovo’s PC
shipments in China grew two percent year-over-year in the quarter, a
solid result given that the overall China PC market was down two
percent.
- In the Asia Pacific/Latin America region, Lenovo
achieved 11.3 percent market share in the third fiscal quarter, up
marginally year-over-year. In a PC market that was down nine percent
year-over-year, the Company grew its PC shipments across the region by
four percent. Lenovo continued its run as the leading PC vendor in
Japan. Consolidated sales across the region totaled US$1.7 billion for
18 percent of Lenovo’s worldwide sales, while operating margins
continued to be profitable.
-
Lenovo in Europe Middle East & Africa grew PC
shipments by 25.5 percent and became the second largest PC seller in
this region, with 11 percent market share, an increase of 3.2 share
points year-over-year. This was the Company’s first ever quarter to
reach the number two position in the region. These achievements were
made despite the headwind of overall industry decline in shipments of 11
percent across the region. The Company had consolidated sales in the
third quarter of US$2.3 billion, a year-over-year improvement of 17
percent, good for 25 percent of Lenovo’s total worldwide sales.
-
Lenovo’s PC shipments in North America in the third
fiscal quarter increased 11 percent year-over-year, in a market that
fell by about seven percent. In this environment, the Company gained 1.5
share points to a record high market share of nine percent.
Consolidated sales grew eight percent year-over-year to US$1.3 billion
in the third quarter, or 14 percent of Lenovo’s total worldwide sales.
Also, for the first time in North America, Lenovo made significant
inroads into the high-end consumer space, taking a large slice of sales
of Windows 8 powered convertible devices – including 30 percent share of
the US$700-and-above market and 45 percent share of the
US$900-and-above market.
PRODUCT OVERVIEW
-
In Laptop PCs, the Company’s worldwide shipments
during the third fiscal quarter were up 9.5 percent year-over-year,
helping Lenovo gain 2.6 share points and achieve market share of 15.8
percent. Across the industry, laptop shipments were down 8.6 percent
year-over-year. Lenovo’s laptop computers continued to be the largest
contributor to the Company’s sales worldwide, generating 52 percent of
Lenovo’s total sales revenue. Consolidated sales for Lenovo’s laptop PC
business worldwide in the third fiscal quarter totaled US$4.8 billion,
an increase of eight percent year-over-year. During the third quarter,
Lenovo took the industry by storm, announcing a new family of
convertible devices, touch optimized for Windows 8: the 11” and 13”
Yogas, IdeaPad Lynx and ThinkPad Twist. Lenovo also announced ThinkPad
X1 Carbon Touch, adding touch experience to the industry’s leading
business-class Ultrabook, and ThinkPad Twist, a business-ready device
that puts a new spin on the traditional convertible tablet.
-
Lenovo’s consolidated sales of Desktop PCs worldwide
increased one percent year-over-year in the third fiscal quarter to
US$2.8 billion, or 30 percent of Lenovo’s total sales revenue. The
Company’s desktop PC shipments worldwide in the third quarter increased
5.8 percent year-over-year worldwide, compared to an overall industry
decrease of 6.8 percent. As a result, Lenovo gained 1.9 share points
year-over-year and achieved a record-high market share of 16.1 percent.
During the third quarter, Lenovo announced its new IdeaCentre Q190, the
world’s smallest full-function desktop PC – measuring just 22mm (0.86
inches) wide – and the latest additions to the C-series all-in-one (AIO)
family, featuring affordable, but powerful performance, and multimedia
capabilities designed for immersive entertainment.
-
As China’s second-largest provider of smartphones and tablets, Lenovo’s MIDH group
continues to rapidly build its business. With consolidated sales of
US$998 million, a 77 percent year-over-year increase in the third fiscal
quarter, MIDH contributed 11 percent to the Company’s overall sales.
Year over year, Lenovo gained 4.7 share points in the China smartphone
market in the third quarter for an overall market share of 12.3 percent
in China. This business achieved profitability as well. During the third
quarter, Lenovo announced that it would begin selling smartphones in
Russia, in addition to previously announced India, Indonesia,
Philippines and Vietnam. These five countries plus China, represent 44
percent of the world’s population, and give Lenovo a strong sales
presence in these important emerging economies.
ABOUT LENOVO
Lenovo (HKSE: 0992) (PINK SHEETS: LNVGY) is a US$30 billion personal
technology company – one of the top two PC makers in the world and an
emerging PC Plus leader – serving customers in more than 160 countries.
Dedicated to building exceptionally engineered PCs and mobile internet
devices, Lenovo’s business is built on product innovation, a
highly-efficient global supply chain and strong strategic execution.
Formed by Lenovo Group’s acquisition of the former IBM Personal
Computing Division, the Company develops, manufactures and markets
reliable, high-quality, secure and easy-to-use technology products and
services. Its product lines include legendary Think-branded commercial
PCs and Idea-branded consumer PCs, as well as servers, workstations, and
a family of mobile internet devices, including tablets and smart
phones. Lenovo, a global Fortune 500 company, has major research centers
in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh,
North Carolina. For more information see
www.lenovo.com.
*See IDC data, 4Q 2012
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FINANCIAL SUMMARY
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For the third quarter ended December 31, 2012
|
|
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(in US$ millions, except per share data)
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|
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|
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Q3 12/13
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Q3 11/12
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Y/Y CHG
|
|
Sales
|
|
9,359
|
|
|
8,372
|
|
|
12
|
%
|
Gross Profit
|
|
1,101
|
|
|
954
|
|
|
15
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%
|
Gross Profit Margin
|
|
11.8
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%
|
|
11.4
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%
|
|
0.4
|
pt
|
Operating Expenses
|
|
(858
|
)
|
|
(761
|
)
|
|
13
|
%
|
Expenses-to-Revenue Ratio
|
|
9.2
|
%
|
|
9.1
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%
|
|
0.1
|
pt
|
Operating Profit
|
|
243
|
|
|
193
|
|
|
26
|
%
|
Other Non-Operating Expenses
|
|
3
|
|
|
(1
|
)
|
|
NA
|
|
Pre-tax Income
|
|
246
|
|
|
192
|
|
|
28
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%
|
Taxation
|
|
(46
|
)
|
|
(38
|
)
|
|
22
|
%
|
Profit for the period
|
|
200
|
|
|
154
|
|
|
30
|
%
|
Non-controlling interests
|
|
5
|
|
|
(1
|
)
|
|
NA
|
|
Profit attributable to equity holders
|
|
205
|
|
|
153
|
|
|
34
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%
|
EPS (US cents)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
1.99
|
|
|
1.50
|
|
|
0.49
|
|
Diluted
|
|
1.96
|
|
|
1.46
|
|
|
0.50
|
|
Contacts
Lenovo Group
Hong Kong:
Angela Lee, +852 2516 4810
angelalee@lenovo.com
or
Beijing:
Amy Shi, +8610 5886 8982
shixy2@lenovo.com
or
U.S.:
Brion Tingler, +1 917-528-1992
btingler@lenovo.com
