Lenovo Group: Third Quarter Results 2021/22
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Lenovo Group: Third Quarter Results 2021/22

Lenovo delivers record quarter, as strategy and investments in innovation continue to drive sustainable profitability growth

HONG KONG — (BUSINESS WIRE) — February 22, 2022Lenovo Group (HKSE: 992) (ADR: LNVGY) today announced record quarterly results for the Group, with historic highs for both profit and revenue and the Group’s first US$20 billion quarter. The company’s focus on innovation and profitability, supported by its operational excellence, has helped it navigate wider industry supply challenges and delivered rapid growth and profitability across all key business groups and geographies.

Lenovo’s performance delivered significant year-on-year improvements. Net income grew at a rate of over 50% for the 6th consecutive quarter, with Q3 growing 62% year-on-year to a record US$640 million. Net income margin improved by nearly one point, on track towards the Group’s goal of doubling in three years. Pre-tax income was a record US$855 million, up 45% year-on-year, and Group revenue continued its strong growth trajectory hitting a record US$20.1 billion, up 17% year-on-year.

Lenovo continues to invest significantly in innovation, with R&D expenses for the quarter up 38% year-on-year, as part of the company’s wider commitment to double R&D investment over three years. Investments are aligned to driving Lenovo’s ongoing transformation to a solutions and services company, by developing technologies focused on the “New IT” full stack architecture of “Client-Edge-Cloud-Network-Intelligence.” Looking ahead, the company remains focused on its 3S strategy (Smart devices/IoT, Smart Infrastructure, Smart Verticals) seeing continued opportunities for sustainable growth and profitability improvements across all areas of the business, keeping it on track to double net margin by the end of FY 2023/2024.

The Hang Seng Indexes Company Limited announced last week that effective March 7, 2022, Lenovo will be included as a constituent stock on the Hang Seng Index – Hong Kong’s benchmark stock gauge.

Financial Highlights:

 

Q3 21/22
US$ millions

Q3 20/21
US$ millions

Change

 

Group Revenue

20,127

17,245

17%

Pre-tax income

855

591

45%

Net Income (profit attributable to equity holders)

640

395

62%

 

 

 

 

Basic earnings per share (US cents)

5.50

3.31

2.19

Chairman and CEO quote – Yuanqing Yang:

“Lenovo continued to embrace the opportunities driven by accelerated digital and intelligent transformation, and our New IT architecture prepared us well with ‘client-edge-cloud-network-intelligence’ capabilities. With another record quarter, we delivered the 6th quarter of more than 50% net income year-on-year growth, and the first US$20 billion revenue quarter in our history. We remain on track to double both our net margin and R&D investment in three years from FY20/21 levels,” said Yuanqing Yang, Lenovo Chairman and CEO. “Once again, we have shown that Lenovo’s innovation, transformation strategy, and strong execution can consistently deliver sustainable profitability increases for the future.”

Solutions and Services Group (SSG): delivering strong growth and high margins - driving higher overall profitability for the Group

Opportunity:

The Solutions and Services Group continues to drive strong profitability and growth in a rapidly expanding market. As technology architecture becomes more complex, customers demand more sophisticated IT services, and the market is predicted to be worth over one trillion US dollars through 2025. This includes higher demand for premier support and customized fulfillment from knowledge workers, nearly half of whom now work remotely.

Q3 performance:

Looking ahead:

Infrastructure Solutions Group (ISG): reaching profitability, growing at a strong premium to market

Opportunity:

Opportunities continue to grow for ISG as ICT infrastructure modernization expands around the world. The ICT infrastructure market is expected to become a US$250 billion market through 2025. By that same time, the edge infrastructure market alone is expected to exceed US$41 billion.

Q3 performance:

Looking ahead:

Intelligent Devices Group (IDG): strong revenue growth and stronger profitability, increasing contribution from non-PC businesses

Opportunity:

The market for smart devices continues to benefit from the new normal of hybrid working and the PC market is forecasted to remain strong and stable, shifting to commercial and premium segments. In smartphones, the market reshuffling will bring more growth opportunities to Lenovo, and the penetration of 5G and development of the New IT of ”edge-cloud-network-intelligence” will provide more growth potential for emerging smart devices such as embedded computing/IoT, AR/VR driven by the metaverse, as well as smart home and smart collaboration solutions.

Q3 performance:

Looking ahead:

Operational highlights and investing for the future

About Lenovo

Lenovo (HKSE: 992) (ADR: LNVGY) is a US$60 billion revenue Fortune Global 500 company serving customers in 180 markets around the world. Focused on a bold vision to deliver smarter technology for all, we are developing world-changing technologies that power (through devices and infrastructure) and empower (through solutions, services and software) millions of customers every day and together create a more inclusive, trustworthy and sustainable digital society for everyone, everywhere. To find out more visit https://www.lenovo.com and read about the latest news via our StoryHub.

 

LENOVO GROUP

 

FINANCIAL SUMMARY

For the quarter ended December 31, 2021

(in US$ millions, except per share data)

 

 

 


Q3 21/22


Q3 20/21


Y/Y CHG

Revenue

 

20,127

17,245

17%

Gross profit

 

3,355

2,786

20%

Gross profit margin

 

16.7%

16.2%

0.5 pts

Operating expenses

 

(2,423)

(2,085)

16%

R&D expenses

 

(549)

(398)

38%

(included in operating expenses)

 

 

 

Expenses-to-revenue ratio

 

12.0%

12.1%

(0.1) pts

Operating profit

 

932

701

33%

Other non-operating income/(expenses) - net

 

(77)

(110)

(30)%

Pre-tax income

 

855

591

45%

Taxation

 

(173)

(160)

8%

Profit for the period

 

682

431

58%

Non-controlling interests

 

(42)

(36)

16%

Profit attributable to equity holders

 

640

395

62%

EPS (US cents)

 

 

 

 

Basic

5.50

3.31

2.19

Diluted

4.92

3.08

1.84

 



Contact:

Hong Kong – Angela Lee, angelalee@lenovo.com, +852 2516 4810
London – Charlotte West, cwest@lenovo.com, +44 7825 605720
Zeno Group - LenovoWWcorp@zenogroup.com