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Lenovo Group Q3 Profit Rises 54% On Improved Margins, Sales Growth

Chinese personal computers maker Lenovo Group Ltd (LNVGY.PK,LNVGF.PK) reported Wednesday a profit for the third quarter that surged from last year, reflecting improved margins and strong sales growth amid higher PC shipments particularly in mature markets.

"Despite the worldwide hard drive shortage in the past quarter, Lenovo continued to achieve strong growth with record results in market share and revenue, as well as record high in PTI (pre-tax income) of US$192 million. For the first time, Lenovo became the number one vendor globally in commercial PCs and in consumer desktop," Chairman and CEO Yang Yuanqing said in a statement.

The company became the world's second largest PC vendor, with record market share of 14.0 percent, after it grew faster than any of the top five PC manufacturers for the ninth consecutive quarter. This, the company said, is due to its continued focus on balanced growth across all geographies, customer segments and product lines.

The Quarry Bay, Hong Kong-based owner of IBM PC business reported profit attributable to equity holders of $153 million for the third quarter, up 54 percent from $100 million in the prior-year quarter. On a per share basis, profit surged to $1.46 from last year's $0.98.

The company's pre-tax income for the quarter surged 59 percent to $192 million from $121 million in the year-ago quarter.

Consolidated sales for the quarter rose 44 percent to a record $8.37 billion from $5.81 billion in the same quarter last year, reflecting the company's strong execution of its "Protect and Attack" strategy.

Gross profit margin for the quarter expanded 20 basis points to 11.4 percent from last year's 11.2 percent.

Lenovo's worldwide PC shipments for the third quarter increased 37 percent from last year, compared to the overall industry growth remaining flat during the same period, outpacing the industry growth/decline in China, Emerging Markets and Mature Markets.

On a geographical basis, China recorded sales of $3.5 billion, up 30 percent and being 42 percent of its worldwide sales, resulting in an industry-leading market share in China of 35.3 percent. PC shipments in China increased 28 percent year-over-year, double the overall industry increase of PC shipments in China of 17 percent.

Consolidated sales in emerging markets grew 13 percent to $1.3 billion or 15 percent of its worldwide sales. PC shipments increased 23 percent in the region amid strong growth in India.

Mature markets posted a strong 81 percent growth to $3.6 billion in consolidated sales or 43 percent of the company's worldwide sales. Lenovo grew its PC shipments in the region by 67 percent.

Product-wise, sales for laptop PC business rose 30 percent to $4.5 billion, and desktop PC sales grew 39 percent to $2.8 billion from a year ago. Lenovo MIDH (Mobile Internet/Digital Home) recorded $565 million in consolidated sales during the third quarter.

"During the quarter, Lenovo sold more than 6.5 million phones, and almost half were smartphones. Lenovo's smartphone market share in China reached double-digit market share in December. We also see strong momentum in our tablet business," Yuanqing added.

LNVGY.PK closed Wednesday's regular trading session at $16.12, up $0.12 or 0.75% on a volume of 21,891 shares, and LNVGF.PK settled at $0.81, up $0.02 or 2.53%.

by RTT Staff Writer

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