Lenovo Brazil operations back in black

The Chinese company turns local businesses around after seven years of losses; plans entry in new areas such as cloud services.
Written by Angelica Mari, Contributing Writer

Chinese manufacturer Lenovo has seen its first positive financial results in Brazil after seven years of losses in its computer division.

The company saw earnings before interest, tax, depreciation, and amortisation (EBITDA) reaching $5 million in the quarter ending September 2017. This compares to a loss of $15 million seen in the same quarter a year earlier and losses of $15 million in the same period in 2015.

Lenovo's Motorola operation - estimated to represent over two-thirds of the company's total earnings - has also seen a turnaround in Brazil. The company saw EBITDA reaching $46 million in the quarter ending September 2017 compared to a $1 million loss posted in the same quarter of 2016.

Motorola is a popular brand in Latin America - only Samsung beats it in the region - having sold 68 percent more units in Q1 2017 in comparison to the same quarter in 2016.

Going forward

Lenovo's plan in Brazil is to continue to manufacture mobile phones and computers but also chase business in other areas such as cloud services for businesses, global chairman and chief executive Yang Yuanqing told Brazilian newspaper Valor Econômico this week in a visit to the country's offices.

"The device alone is not enough - in future it will all be connected, hence the need for cloud and services. In a market as big as Brazil, it might make sense to have local structure and content given the scale," the executive told Valor.

Last week, Lenovo-owned smartphone maker Motorola appointed Brazilian executive Sergio Buniac to lead its European operations in what could be an attempt from Lenovo to replicate in Europe the positive results in mobile phone sales seen in Brazil.

Restructuring years

Lenovo has seen a deep restructuring in Brazil over the last few years and things started to improve last year.

The turnaround process began with a cost-cutting strategy, which included halving the size of its manufacturing facility and reducing the workforce that at one point reached 5000 staff down to less than 800 employees.

Last year, the company hired a new head for Brazil and announced that it would bolster its computer business by strengthening its channel presence in Brazil, with specific focus in servers and datacenter equipment.

Back in 2012, the firm tried to increase its presence in the Brazilian market by buying local manufacturer CCE, but sold the company back to its original owners in 2015.

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