Lenovo Q2 Profit Surges

11/5/2009 7:27 AM ET

(RTTNews) - Personal computer maker Lenovo Group (LNVGY.PK) Thursday reported a net profit for the second quarter that more than doubled from last year, benefited by a gain on sales of investments and lower operating and restructuring costs, despite a slight decline in sales.

For the second quarter, net earnings attributable to shareholders were US$53 million or US$0.55 per share compared with US$23 million or US$0.25 per share in the previous-year period.

During the three-month period, the company recorded a one-time gain of US$38 million with regard to disposal of investment as other income.

The company's sales for the period slipped 5% to US$4.10 billion from US$4.33 billion in the second quarter of the prior year. Lenovo's gross profit margin was 10.6% compared with 13.1% in the corresponding period prior year.

By product group, consolidated sales of Lenovo desktop computers worldwide slipped 13% from the prior year to US$1.5 billion in the second fiscal quarter. Consolidated sales for Lenovo's notebook PC business worldwide totaled US$2.6 billion, down 1% year-over-year.

By geography, Lenovo China sales for the three-month period, accounting for 49% of the company's worldwide sales, was US$2.0 billion, up 9% year-over-year.

In emerging markets, Lenovo's consolidated sales for the quarter totaled US$618 million, or 15% of the company's worldwide sales. PC shipments across the region rose 10% year-over-year in the second quarter, compared to an overall industry decline of 8%.

Consolidated sales from mature markets for the period was US$1.5 billion, or 36% of the company's worldwide sales. Lenovo stated that flat demand in commercial PC opportunities across Western Europe and North America resulted in a year-over-year growth of 0.4% in Lenovo's PC shipments in mature markets during the quarter. PC shipments in North America rose 1% year-over-year, whereas PC shipments in Western Europe decreased year-over-year.

During the second quarter, worldwide PC shipments increased 17% year-over-year, while industry PC shipments grew 2.3% worldwide for the same period.

Excluding restructuring costs and other income, operating expenses incurred by Lenovo during the period slumped to US$390 million from US$510 million a year earlier. Restructuring costs for the quarter were US$3 million versus US$24 million in the previous-year period.

In Wednesday's regular trading session, LNVGY.PK closed trading on the Pink Sheets at $11.25 per share. In the past 52-week period, the shares have been trading in a range of $3.35 to $12.24.