Lenove third quarter profit up 25% to US100mn

The computer manufacturer posted highest-ever market share in China of 32.2% while worldwide shipments increased 20.6%.

Lenovo Group on Thursday reported results for its third fiscal quarter ended December 31, 2010, and for the fifth quarter in a row, the Company grew faster than any of the top five PC manufacturers, resulting from Lenovo’s continued focus on balanced growth across all geographies, customer segments and product lines.

During the third quarter, Lenovo recorded its highest-ever market share in China of 32.2 percent, growing at three times the industry rate there, and maintained its double-digit worldwide market share position at 10.2 percent. For the seventh quarter in row, Lenovo grew faster than the industry as a whole, according to a Lenovo report.

During the third fiscal quarter Lenovo’s PC worldwide shipments increased 20.6 percent year-over-year, compared to an industry growth rate worldwide of 3.4 percent during the same period.

Consolidated sales for the third fiscal quarter increased 22 percent year-over-year to US$5.8 billion. The Company’s gross profit for the third quarter grew 22 percent year over- year, to US$648 million, with gross margin at 11.2 percent. By comparison, gross margin for the previous quarter was 10.3 percent.

Operating profit for the third fiscal quarter was US$127 million (excluding a US$2 million restructuring cost), a 28 percent improvement year-over-year. Lenovo reported a third quarter pre-tax income of US$121 million, a 29 percent increase year-over-year. Profit attributable to equity holders for the third fiscal quarter was US$100 million, a 25 percent gain year-over-year. Basic earnings per share for the third fiscal quarter was US$1.03 cents, or HK$8.00 cents. Net cash reserves as of December 31, 2010, totaled US$3.2 billion.

In recent weeks, Lenovo announced a joint venture with NEC Corporation in Japan and separately, a new mobile internet business group. The joint venture with NEC forms the largest PC group in Japan, and establishes Lenovo as the leader in two out of three of the largest PC markets in the world. Lenovo’s new Mobile Internet and Digital Home business group will focus on creating mobile Internet devices, including tablets and smartphones, as well as devices for new categories like cloud computing, smart TV, and the digital home.

“The Board is satisfied with Lenovo’s performance in this quarter in all aspects of measurement. For the fifth consecutive quarter, Lenovo has continued to be the fastest growing among the top five PC manufacturers globally. Volume, revenue, cost and expense, and pre-tax-income targets were all delivered. The outstanding result indicates that the strategy of Protect-Attack and balanced development has shown its effect,” said Lenovo Chairman Liu Chuanzhi. “While driving for business momentum, Lenovo will further increase investment in brand building and product development. I believe that today’s investment will bring good return to our shareholders in future. One of the keys to our success is that we are building a winning culture at Lenovo, and our success in the marketplace is a direct result of that effort.”

“By executing our ‘Protect and Attack’ strategy, we were able to grow across all regions, product types and customer segments. Our core PC business continues to deliver balanced growth. At the same time, saw great momentum in our mobile Internet business which double the sales of the Lenovo smartphone from previous quarter. This growth was driven by investments in marketing, product development and the creation of a new, more focused Mobile Internet and Digital Home business group,” said Lenovo CEO Yang Yuanqing, “Looking forward, we will invest in building our global brand, driving more product innovation and creating an even more efficient end-to-end business model.

Based on this, we are confident we can continue to outgrow the market and deliver strong results across our business.”