China’s largest PC maker, Lenovo Group, has seen sales in its home market plummet – but its strategy of focusing on global expansion has buffered it.
Hong Kong-listed Lenovo’s PC business reached record worldwide share of 20.6 per cent in the three months to June 30, growing in every region and it powered its way to the number three position in the critical US market, with record 13 per cent share.
Total revenues were US$10.7 billion for the three months, up three per cent year on year. Excluding foreign exchange impacts, revenue rose 10 per cent.
Lenovo says it saw “severe challenges” in its main markets, facing significant declines in the global PC and tablet markets, as well as slowing growth and increasing competition – especially in China – in smartphones.
“Last quarter, we faced perhaps the toughest market environment in recent years, but we still achieved solid results,” said Yuanqing Yang, Chairman and CEO of Lenovo.
“Our PC business remained number one for the ninth straight quarter. In the smartphone business, our strategic shift from China to the rest of world has paid off. And our combined enterprise business achieved operational PTI for the third consecutive quarter.
“But to build long term, sustainable growth, we must take proactive and decisive actions in every part of the business.”
The company’s gross profit for the first fiscal quarter increased 22 per cent year on year to US$1.6 billion, with gross margin at 15.4 per cent. Operating profit for the quarter declined 67 per cent to US$96 million.