Lenovo Group today reported results for its fourth fiscal quarter and
full year ended March 31, 2008, driven by strong performance in all
geographies and product segments. During the fourth quarter, Lenovo´s
worldwide PC shipments grew 21 percent, well ahead of the industry
average growth of approximately 15 percent. As previously announced, Lenovo completed the sale of its mobile handset
business in March 2008 in order to better focus on its core PC business.
As a result, the Company recorded approximately US$65 million as a
pre-tax gain on disposal. Taking into consideration the operating loss
the profit from the mobile handset business amounted to US$36 million
and US$20 million in the fiscal fourth quarter and full year
respectively. Consolidated sales for the quarter from continuing operations (excluding
the mobile handset business) rose 13.5 percent year over year to US$3.7
billion. The Company´s gross profit margin for
the fourth quarter reached 15.0 percent. Including the impact of
restructuring, Lenovo reported pre-tax income of US$103 million from
continuing operations. Including the net profit of US$36 million from
discontinued operations, profit attributable to shareholders for the
quarter grew 133 percent to US$140 million. Basic earnings per share totaled 1.56 US cents, or 12.17 HK cents. Net
cash reserves as of March 31, 2008, totaled US$1.6 billion. Lenovo´s
board of directors has proposed a final dividend of 12.80 HK cents, or
approximately 1.64 US cents per share. "Lenovo continued to demonstrate strong
execution of our strategies in the past quarter, achieving the eighth
consecutive quarter of profitable growth," said Lenovo Chairman Yang Yuanqing. "In the
past three years since the acquisition, Lenovo has successfully achieved
the financial targets which we set and accomplished numerous milestones.
We have successfully assumed responsibility for our sales and customers
completed our brand transition, rolled out the transaction business
outside of China, launched our consumer business, and released highly
innovative products. Lenovo´s global
competitiveness substantially increases with each of these solid steps
and provides greater momentum for sustainable growth. "Looking forward, Lenovo will continue to
maintain our momentum in the relationship business and the Greater China
region, while pursuing growth opportunities in the emerging markets
notebook markets and transaction business, specifically the consumer
business, and actively fostering new business to maintain profitable
growth that outpaces the industry." "Lenovo´s unique
heritage has enabled us to implement one of the strategic foundations of
this company - our worldsourcing business
model," said President and CEO William J.
Amelio. "A complete approach to doing
business in a new global economy, worldsourcing transcends boundaries
cultures and structures. It enables us to leverage our cultural and
geographic strengths to manage costs, increase efficiency and harness
the power of innovation from across the global organization." GEOGRAPHIC OVERVIEW
Lenovo Greater China posted US$1.29 billion in consolidated
sales in the fourth fiscal quarter, up 18 percent, as the Company´s
growth of 25 percent in PC shipments outpaced the industry average for
the Greater China market. During the quarter, Lenovo further
strengthened its number one market position on the strength of sales
across product lines. The company´s Greater
China business accounted for 34 percent of total sales in the quarter.
The Americas accounted for US$1.0 billion in consolidated
sales, or 27 percent of total sales. The quarter marked Lenovo´s
fifth consecutive profitable quarter for the Americas, on the strength
of desktop market share gains and overall PC demand in Canada. Lenovo
also improved productivity in the region, cutting controllable
expenses. Sales of notebooks in the U.S. were affected by a slowing
economy, although Lenovo maintained its overall U.S. market share.
Lenovo PC shipments in the Americas during the quarter increased 9
percent.
In the Europe, Middle East and Africa region (EMEA), shipments
increased 30 percent in the fourth fiscal quarter. For the same
period, consolidated sales totaled US$879 million, or 24 percent of
total sales. Sales growth was spurred by demand for notebook
computers, despite some weakening in consumer demand.
Shipments for the Asia Pacific business (excluding Greater
China) increased 18 percent in the fourth fiscal quarter. Consolidated
sales in Asia Pacific totaled US$543 million in the fourth quarter, or
15 percent of total sales. Market share gains in Japan and volume
gains in ASEAN, Australia and New Zealand were offset by investment in
India.
PRODUCT OVERVIEW
Lenovo´s Notebook computers
continued to be the largest contributor to total sales. Notebook
shipments in the fourth fiscal quarter were up 38 percent year over
year, and consolidated sales grew 22 percent to US$2.3 billion, or 61
percent of total sales for the quarter. Growth was driven by increased
adoption of notebook PCs worldwide and an expanded portfolio of Lenovo
products introduced to meet growing demand.
In the fourth fiscal quarter, Lenovo´s Desktop shipments rose 9 percent year over year. Consolidated sales
increased 2 percent to US$1.4 billion in the quarter, or 38 percent of
total sales. Performance was positively impacted by continued focus on
operational efficiencies and introduction of competitive desktop PC
offerings.
FULL YEAR RESULTS For the 2007/08 fiscal year, consolidated sales from continuing
operations (excluding the mobile handset business) increased 17 percent
year over year to US$16.4 billion. Lenovo´s
PC shipments grew 22 percent year over year, ahead of the estimated
industry average of 16 percent. The Company´s
gross profit margin for the fiscal year improved to 15.0 percent from
13.5 percent. Including the impact of restructuring, pre-tax income for continuing
operations surged 232 percent to US$512 million. Reflecting the impact
of restructuring and the net profit of US$20 million from discontinued
operations, full-year profit attributable to shareholders increased 201
percent year over year to US$484 million. Basic earnings per share for the 2007/2008 fiscal year totaled 5.51 US
cents, or 42.98 HK cents. ABOUT LENOVO Lenovo (HKSE: 992) (ADR: LNVGY) develops, manufactures and markets
high-quality, secure and easy-to-use technology products and services
worldwide and is dedicated to building the world´s
best-engineered personal computers. Formed by Lenovo Group´s
acquisition of the former IBM Personal Computing Division, Lenovo´s
heritage in both emerging and developed markets has resulted in a New
World Company business model where ideas, operations and resources are
borderless and mobile. With four operational hubs in Beijing, Raleigh
Singapore and Paris, Lenovo has major research centers in Yamato, Japan;
Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina, as
well as a marketing center in Bangalore, India. For more information
see www.lenovo.com
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LENOVO GROUP FINANCIAL SUMMARY For the fiscal quarter and full year ended March 31, 2008 (in US$ millions, except per share data) - - - - - -
- - - - - -
Q4 07/08
Q4 06/07
Y/Y % CHG
FY 07/08
Y/Y % CHG - - - - - -
Continuing operations(1)
- - - - - -
Sales 3,734
3,290
13.5 % 16,352
17.0 % - - - - - -
Gross Profit 559
489
14.3 % 2,450
29.8 % - - - - - -
Gross Profit Margin 15.0 % 14.9 % 0.1 pts 15.0 % 1.5 pts - - - - - -
Operating Expenses (470 ) (424 ) 10.8 % (1,921 ) 10.8 % - - - - - -
Operating Expense Margin 12.6 % 12.9 % (0.3) pts 11.7 % (0.7) pts - - - - - -
Other Income / (Expense), net 6
(2 ) -
17
110.8 % - - - - - -
Pre-Tax Income before restructuring and other non-operating income
/ (expense)
95
63
50.8
%
546
215.5
% - - - - - -
Other non-operating income / (expense)(2)
8
(2
)
-
14
-
- - - - - -
Restructuring Costs 0
-
-
(48 ) 303.9 % - - - - - -
Pre-Tax Income 103
61
68.6 % 512
231.8 % - - - - - -
Profit from continuing operations 104
56
87.8 % 464
262.5 % - - - - - -
Profit from discontinued operations(3) 36
4
-(5 ) 20
-(5 ) - - - - - -
Profit Attributable to Shareholders 140
60
132.8 % 484
200.5 % - - - - - -
EPS (US cents)
- - - - - -
Basic 1.56
0.70
122.9 % 5.51
194.7 % - - - - - -
Diluted 1.44
0.68
111.8 % 5.06
175.0 % - - - - - -
Dividend per share (HK cents) 12.80
2.80
357.1 % 15.80
203.8 % - - - - - -
EBITDA(1)(4) 152
110
39.1 % 798
113.0 % - - - - - -
- - - - - -
(1) Continuing operations
include the PC business only. Mobile handset sales of US$93
million in Q4 and US$436 million in FY 2007/08 are classified as
discontinued operations. (2) Includes finance income
finance cost and share of profits/(losses) of associated companies. (3) Includes taxation from
discontinued mobile handset business. (4) Excludes restructuring
charges. (5) Comparison not applicable
because current year includes gain on sale. - - - - - -
