Lenovo has a new organisational structure designed to capitalize on service-led transformation growth opportunities and says PCs will continue to boom. Reporting its latest figures, it says it had a second consecutive record-breaking quarter, with revenue, pre-tax income, and net income all reporting record highs. Group revenue was up by 22% year-on-year to $17.2bn.
All core businesses delivered both topline and bottom-line year-on-year growth. A new Solutions & Services Group (SSG) will further drive the company’s transformation by delivering incremental business across smart verticals, attached services, managed services and ‘as a service offerings’ including DaaS and Truscale.
“The delivery of yet another record-breaking quarter is a reflection of our innovative product portfolio and operational excellence, which drove growth across all businesses,” said Yuanqing Yang, Lenovo Chairman and CEO. “Clearly, 2020 was a challenging year that brought remarkable changes to our world, yet Lenovo quickly responded to the changing market driven by new work and lifestyle trends and delivered strong results. Now, as we begin to see the results of our transformation investments, we will further invest in technology and innovation, drive intelligent transformation across industries, and create sustainable growth.”
“A focus on innovation and high-growth segments helped extend Lenovo’s lead as #1 in PCs, with a record 25.3% market share globally. All geographies performed strongly – with North America achieving 60% volume growth year-on-year, EMEA becoming #1 by market share for the first time, Asia Pacific improving profitability to a new record, and China growing shipments 30% year-on-year,” it says.
The challenges of 2020 continue, in varying degrees, into the new year. These include ongoing geopolitical uncertainties, component supply shortages resulting from strong demand, and the global COVID-19 pandemic. Nevertheless, as a global company operating in 180 markets and with more than 30 manufacturing sites around the world, the outlook for 2021 remains positive. The new global norm of work-, study- and play-from-home will continue to drive long-term and sustainable growth trends in device demand and cloud/infrastructure requirements.
Lenovo’s Intelligent Devices Group (IDG) continues to lead the Group’s growth with the PC and Smart Devices Group (PCSD) delivering another historic quarter. Revenues of US$14 billion, up 27% year-on-year, were accompanied by PTI up 35% year-on-year to US$925 million and a record profit margin of 6.6%.
IDG’s second business unit, the Mobile Business Group (MBG), delivered double-digit revenue growth year-on-year, and recovered from the impact of COVID-19 by not only resuming profitability, but also achieving its highest profitability since the Motorola business was acquired. Solid performance in Latin and North America underpinned rapid expansion in Europe and Asia, where there was strong double- and triple-digit growth thanks to expanded carrier relationships and a stronger product mix. The business will continue to leverage its strong product portfolio and 5G innovation to drive future profitable growth.
The Data Center Group (DCG) achieved record revenue of US$1.63 billion thanks to across-the-board growth while improving profitability by almost a point year-on-year. The Cloud Service Providers and Enterprise/SMB segments delivered year-on-year growth at a premium to the market. Enterprise/SMB reached US$1 billion in revenue, the highest amount in over three years, while Storage had record revenue and outgrew the market by 11 points.
“Revenue in Software Defined Infrastructure and Services reached a new record too. Lenovo’s TruScale Private Cloud Infrastructure-as-a-Service combined with SAP’s HANA Enterprise Cloud has been well received and is generating a strong pipeline of demand, while the business extended its #1 position in TOP500 supercomputers,” it says.
