Lenovo Delivers Robust Revenue and a Record Pre-tax Income

Lenovo Group had robust results for its full fiscal year and the fourth quarter that ended in March. The company delivered full-year revenue exceeding US$50 billion for the second consecutive year. Profitability remained a strength, with historical high pre-tax income of US$1.02 billion, up almost 19% year-on-year. Full-year Net Income was US$665 million, up 12% year-on-year.

Basic earnings per share for the full year were 5.58 US cents or 43.61 HK cents, and for the fourth quarter the figure was 0.36 US cents or 2.80 HK cents.  Lenovo’s Board of Directors declared a final dividend of 2.77 US cents or 21.50 HK cents per share for the fiscal year ended March 31, 2020.

“Amid one of the most significant periods of global change and transformation we have ever seen, Lenovo significantly transformed its business over the past year. From achieving record PTI of US$1.02 billion to reaching near record revenue of US$50.7 billion, I could not be prouder of our strong performance,“ said Yang Yuanqing, Lenovo Chairman and CEO.

Intelligent Devices Group (IDG) continued to lead the company’s performance. The PC and Smart Devices group, one of the two IDG business units, led the way with revenue for the year of almost US$40 billion, up 3.6% year-on-year. Profitability improved, with pre-tax income a record high of US$2.3 billion (more than 18% year-on-year) and a record high PTI margin of 5.9%, up 0.7 points. Leadership of the overall global PC market was extended, with share up more than 1 percentage point at 24.5%.

IDG’s second business group, the Mobile Business Group, was on target for a breakthrough year until the fourth quarter impact of the required closure of the company’s primary smartphone factory in Wuhan due to COVID-19. Overall MBG revenue declined and pre-tax loss was US$43 million, greatly narrowed by US$96 million year-on-year. The business continued its focus on innovation, reentering the premium segment with the foldable Motorola razr smartphone.

The Data Center Group saw overall revenue decline 8.7% due to softer Hyperscale demand and significant commodity price declines, but non-hyperscale revenue grew 5.3% year-on-year. This was driven by double-digit revenue growth in Software Defined Infrastructure, Storage, Software and Services. In particular storage revenue grew more than 50% year-on-year. In addition, non-hyperscale server volume grew by 14% and China revenue by 23% year-on-year. The company also extended its #1 leadership in High Performance Computing with 173 of the top 500 systems worldwide now running on Lenovo.

Transformation businesses demonstrated solid progress. Smart IoT revenue almost quadrupled (+296%) driven by AR and VR, Smart Office and Internet of Things. Smart Infrastructure grew 37% as Network Function Virtualization started to generate revenue. And Smart Vertical revenue more than doubled (+133%) thanks to strong growth in Data Intelligence Business Group, smart healthcare and smart education solutions. Software and Services had a breakthrough year with record revenue of US$3.5 billion, up 43.2%, and becoming the catalyst for the Group’s overall transformation.