China still strong for Lenovo Group

While sales fell 9.8 per cent in China for technology giant Lenovo Group for its first quarter ending June 30, the country accounted for 28.4 per cent of the company’s worldwide sales.

Consolidated sales reached US$2.9 billion, and pre-tax profit margins were flat at 4.8 per cent amid softening PC demand.

Lenovo says its mobile business is moving the portfolio to higher price bands and improving user experiences in China. Data-centre revenues grew 14 per cent year-over-year, a premium for the market, supported by growth from hyperscale and contributions from new partnerships.

Sales in the Asia Pacific region reached US$1.7 billion, 16.7 per cent of the worldwide figure, while pre-tax profit margins were down 1.2 points to 1 per cent, mainly because of a weaker PC market in Japan and the impact of currency fluctuation.

PC market share again edged up, by 0.4 points to reach 16.4 per cent. The mobile business outgrew the market in key countries, including India and Indonesia, while the data centre group continues to work on improving profitability.

Overall revenue for Lenovo was US$10.1 billion, down 6 per cent, with a net income of US$173 million, up 64 per cent.

During the quarter Lenovo’s core markets saw either slow growth or year-over-year industry declines: PCs were down 4.1 per cent and tablet shipments fell 11.1 per cent, while server industry shipments were flat and smartphone markets grew 0.7 per cent.

“Going forward, in PCs we will focus on high-growth segments and leverage industry consolidation,” says chairman/CEO Yuanqing Yang. “In smartphones, we will leverage innovative, differentiated products and continue to shift to higher price bands to drive growth and turn around this business.”

Lenovo’s Data Center Business Group (DCG), which covers servers, storage, software and services sold under both the Lenovo ThinkServer and the System X brands, continues to face stiff challenges in mature markets, it strengthened its lead in the market in China, increasing revenue 14 per cent.