Lenovo claims record but flat revenue for third quarter

Chinese company warns there will be short term hits due to coronavirus.
Written by Chris Duckett, Contributor

Lenovo has laid claim to record quarterly revenue and pre-tax profit in the three months to December 31, collecting $305 million in profit before tax, an increase of 11% on the same time last year, on revenue of $14 billion, up a mere $68 million. After tax, the company reported $305 million, an increase of 15% year on year.

For the first nine months of its 2019 fiscal year, Lenovo has reported a revenue increase of 2% to $40 billion, and a 42% after-tax profit jump to $741 million.

In its statement, Lenovo said the quarter had geopolitical uncertainties, component supply shortages, and the arrival of coronavirus.

"Like the rest of the industry, Lenovo is inevitably facing some short-term constraints and delays as the supply chain is ramped back up after the extended Chinese New Year factory closures," it said.

"As a result, Lenovo will leverage its geographical balance, operational excellence and strength in managing complex supply chains across a global manufacturing footprint, and solid strategy execution in order to weather the challenges."

The PC and smart devices group had record shipments, record revenue of $11 billion, and reported pre-tax profit of $648 million.

The mobile business saw revenue decline by 17% to $1.38 billion while making $3 million in pre-tax profit. The company said its new Motorola Razr would allow it to re-enter the premium market, however, its durability is questionable.

Lenovo's data centre group reported it increased shipments by 18% to post revenue of $1.6 billion, however it recorded a loss of $47 million for the quarter, which was $8 million less than the loss reported at this time last year.

"While the year-on-year revenue growth is subdued in the period under review, it represented significant improvement from the 14% and 17% declines in the first two quarters of current fiscal year," Lenovo said.

The company added its software and services revenue surpassed $1 billion in a quarter for the first time, up 41% on the third quarter last year.

In its Australian 2019 financial year, Lenovo Australia and New Zealand reported consolidated revenue had increased to AU$799 million from the AU$729 million recorded during the corresponding period last year. After-tax profit dropped to AU$3 million from AU$12.6 million a year prior, with the company stating it paid AU$3 million in aggregate income tax.

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