Lenovo said its revenue rose 6.8 percent to $16.69 billion in the quarter ended March 31 from $15.63 billion a year earlier. This is Lenovo’s slowest quarterly growth in seven quarters.
Lenovo also reported the annual result for its fiscal year ending in March. Revenue rose 18 percent to $71.6 billion and profit increased 72 percent to $2 billion, the highest levels for both since the company went public in 1994.
Lenovo in fiscal 2021-22
Lenovo Solutions and Services Group (SSG) – $5.4 billion (+30 percent)
Lenovo Infrastructure Solutions Group (ISG) – $7 billion (+13 percent)
Lenovo Intelligent Devices Group (IDG) – $60 billion (+18 percent)
China’s Lenovo has warned that shipments would drop in the short term as China’s COVID lockdowns enhanced shortages of microchips.
Lenovo is one of the world’s largest makers of personal computers (PC). Lenovo is facing supply chain headaches that have been worsened by a protracted shortage of chips, business disruptions from the Russia-Ukraine war and China’s efforts to stop the spread of COVID in the country.
“Due to the macro economic headwinds, the shortage is weighing significantly in the very short term,” Luca Rossi, executive vice president of Lenovo, told a post-earnings call.
“Specifically in this quarter, the manufacturing shutdowns will impact the total shipments in basically everywhere, particularly in China,” he said, adding that demand was also being curbed by geopolitical tensions and inflationary pressure.
Lenovo’s CFO Wai Ming Wong said the company’s Shenzhen factory operations were impacted during the quarter. The south China city imposed a one-week lockdown in March and conducted multiple rounds of testing after a jump in COVID cases.
Beijing-based Lenovo said it was seeing some easing in supply shortages for the PC segment, but said its smartphone and data centre businesses were still under heavy pressure.
Lenovo led the global PC market with 23.1 percent share in the January-March period, according to data from research firm Counterpoint.
A rush to buy PCs to work at home during the pandemic culminated in record sales and profit for Lenovo during the December quarter. Sales have begun to lose steam as China, the company’s biggest market, has been hit by the Omicron variant, keeping consumers at home and shutting factories.
Counterpoint reported in April that PC shipments fell 4.3 percent in the first quarter of 2022, as the war in Ukraine and China’s lockdowns pressured already fragile supply chains and added to shortages of components.
Lenovo India
Lenovo India’s revenue rose 38 percent to $2.2 billion for the full fiscal year ending March 31, 2022.
It was supported by nearly doubling the volume of manufactured PCs and smartphones in India while increasing locally manufactured tablets manifold.
“Our 38 percent increase in revenue for FY21-22 clearly shows that Lenovo is meeting the expanding need for transformational technology solutions in India,” said Shailendra Katyal, Managing Director, Lenovo India.
“This year service-led transformation strategy has shown concrete results, with a 58 percent rise in our services booking revenue.”
Lenovo will be hiring 12,000 R&D professionals around the world over the next three years as part of its commitment to double Research and Development investment. Last year, R&D investment grew 43 percent to $2 billion. R&D headcount grew 48 percent year on year, surpassing 15,000 with one in every five employees now working in R&D. Investments are focused on the New IT architecture, or client-edge-cloud-network-intelligence.
