by CIO Staff

Lenovo Sees Slimmer Profit as Sales Rise

Nov 09, 20062 mins
IT Leadership

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Lenovo Group Thursday reported a slimmer profit for the first half of its fiscal year, despite a rise in sales during the period.

Lenovo’s revenue for the six-month period that ended on Sept. 30 was US$7.2 billion, up from $6.2 billion during the same period last year. But the company’s profit attributable to shareholders fell by 53 percent during the first half of its fiscal year, from $91.2 million to $43.1 million, it said in a filing to the Hong Kong stock exchange.

The company saw a 10 percent year-on-year increase in the volume of shipments for the second fiscal quarter, but pricing pressure meant that revenue for the quarter increased just 1 percent year on year, to $3.7 billion. Pretax income was $43 million. The company blamed slow growth in mature markets and intensified competition for the small revenue increase.

The company maintained its PC sales lead in China, increasing shipments there by 25 percent during the quarter. China accounted for 39 percent of Lenovo’s total revenue for the quarter, at $1.4 billion.

However, Lenovo lost ground in North and South America, with shipments there decreasing by 9 percent. Sales in Asia-Pacific were flat, the company said.

Notebook computer sales accounted for 52 percent of total revenue for the quarter, at $1.9 billion. Lenovo notebook shipments were up 20 percent year on year, it said. Its mobile handset business saw 39 percent year-on-year growth in shipments, but accounted for only 4.5 percent of total revenue, at $166 million.

In August, Lenovo reported a profit of $5 million on revenue of $3.5 billion during the first quarter of its fiscal year. At that time, company officials said profits had been dragged down by costs related to layoffs and a restructuring program announced in March.

-Sumner Lemon and Steven Schwankert, IDG News Service (Singapore Bureau)