Lenovo's Data Center Group (DCG) continues its transformation, tracking not only to its commitments for the third consecutive quarter but also delivering its highest revenue in the last two years. This progress has been fueled by consistent momentum across all segments and all geographies.Lenovo's Mobile Business Group (MBG) met expectations for the quarter even as the industry faces enormous competitive challenges. As the company has indicated previously, it takes a long-term view of this business and believes that the right strategy is in place to deliver short-term improvements and sustainable growth in the long-term. Latin America continues to be a stronghold, outgrowing the market by almost 30 points year-on-year. The Company's gross profit increased 9.8 percent year-over-year to US$1.8 billion, which was a 8.6 percent improvement quarter-to-quarter. Gross margin was 13.5 percent, a slight increase compared to last year. Operating profit increased by US$114 million quarter-to-quarter. Basic loss per share was 2.53 US cents or 19.72 HK cents, resulting from a one-off non-cash tax charge of US$400 million. This follows the re-measurement of US deferred tax assets after the recently enacted US tax reform legislation. In view of this, the company believes that the lower tax rate can benefit the US operations over time. ADDITIONAL BUSINESS GROUP HIGHLIGHTS PC and Smart Devices (PCSD) business group:
- Shipped 15.7 million PC units, flat year-over-year. Revenue grew 7.6 percent compared to last year's Q3 to US$9.3 billion, and up 10.4 percent from the prior quarter - the 5 th consecutive quarter of year-to-year revenue growth. The company maintained its industry-leading margin.
- Momentum was particularly strong across the globe with double-digit revenue growth year-over-year in EMEA, Asia Pacific (AP) and Latin America (LA).
- Latin America's performance stood out with Lenovo market share now at 20% driven by strong growth in Brazil.
- Highest quarter revenue in two years at US$1.2 billion, up 16.7 percent year over year and 25.5 percent sequentially.
- All geographies achieved double-digit growth and margin improvement. North America and EMEA saw their third straight quarter of year-over-year revenue growth.
- China returned to year-over-year revenue growth and margin improvement, thanks to a stabilized Hyperscale business and success with High Performance Computing and Software Defined Infrastructure.
- Extended number one ranking in x86 customer satisfaction, according to TBR (Technology Business Research), for the 8 th straight quarter. Additionally the team added 88 new world record workload benchmarks - four times more than any other industry player.
- Revenue of US$2.1 billion was down 5 percent from a year earlier, but flat compared to the prior quarter.
- Latin America remained the strong core of the business, seeing double-digit revenue growth (+37%) and strong profitability.
- 5 million Moto Z handsets have now been shipped globally, with activation rates for MODS up 64% year-to-year.
- Lenovo saw the Moto brand strengthen in Western Europe, with shipments up 23 percent compared to the same period a year ago.
|LENOVO GROUP FINANCIAL SUMMARY For the fiscal quarter ended December 31, 2017(in US$ millions, except per share data)|
|Q3 17/18||Q3 16/17||Y/Y CHG|
|Gross profit margin||13.5||%||13.1||%||0.4pts|
|Other non-operating expenses||(54||)||(37||)||48||%|
|(Loss)/Profit for the period||(275||)||107||N/A|
|(Loss)/Profit attributable to equity holders||(289||)||98||N/A|
|EPS (US cents)|
|* In accordance with accounting policies, a one-off non-cash tax charge of US$400 million has been included in Q317/18 which reflects the re-measurement of US deferred tax assets after the recently enacted US tax reform legislation.|