IT Upgrades and Digitization Fuel Lenovo’s 119% First Quarter Net Profit Growth

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Lenovo achieved more than double its net profit for the first quarter of fiscal 2022 as opportunities created by digitization and IT upgrades in devices, infrastructure and applications continued to fuel profitability overall group.

The Chinese PC maker on Wednesday reported net profit up 119% to $ 466 million, while the group’s revenue rose 27% from $ 13.3 million to just under of $ 17 million in the first quarter. For the same period, profit before tax was $ 650 million, up 96% year-over-year.

“The accelerated digital and smart transformation has created significant market opportunities globally. Lenovo is successfully capturing them as we move from a device company to a service and solution provider. Proof of this is our performance – this quarter alone, we have doubled the year in profitability – over one year as the net profit margin hit its highest level in many years, ”said Yuanqing Yang, Chief Executive Officer. general of Lenovo.

This quarter was also the first time the company reported under its new organizational structure, which it announced earlier this year. It now compromises the Solutions and Services Group (SSG), the Infrastructure Solutions Group (ISG) and the Intelligent Device Group (IDG).

SSG saw its revenue increase 38% year-on-year to $ 1.2 billion, which Lenovo said was due to strong growth in its three product segments – support services, managed services and vertical solutions – and in all regions.

“Targeting the fastest growing ‘new IT services’ segment, SSG made a successful debut in the fiscal first quarter with strong revenue growth and superior profitability. SSG’s financial results underscored the group’s strategic focus on service-oriented transformation which has started to bear fruit, ”said Lenovo.

As for the bakery business of the company, IDG, it saw its operating profit increase by 43% and its turnover by 28% to $ 1.1 billion and $ 14.7 billion. , respectively. The company said the boost was fueled by a combination of growth in PC segments such as games and workstations, and non-PC segments, which accounted for 18% of IDG’s total revenue. Its non-PC segments included Lenovo’s smartphone business, which experienced 64% annual growth due to market share gains in America and Europe.

“As the primary beneficiary of the recovery in business spending, IDG’s commercial PCs have been a silver lining with 23% year-over-year revenue growth. -and-light and Yoga-series in the consumer PC segment, ”noted Lenovo.

ISG, according to Lenovo, had its “best results in five years” since its acquisition of IBM’s x86 server business, generating revenue of $ 1.8 billion, an increase of 14% in year-over-year. The company pointed out that the growth was made possible through improved profitability of the cloud service provider and the enterprise and small and medium business segments.

In an effort to improve its competitiveness, Lenovo increased its R&D spending by 40% year-on-year to $ 86 million in the quarter. This was mostly about AI, 5G, and product designs in what the company called high-margin products, including smarter PCs, smart offices, a hybrid cloud, and a green data center.

“In the future, we will continue to increase investments in R&D, with the aim of doubling them over the next three years; we will continue to improve our operational excellence; and we remain committed to green innovation and corporate citizenship to achieve long-term sustainable increases in profitability. Yang said.

According to Lenovo, other areas of interest will be business areas such as vertical solutions, infrastructure solutions, high-end PCs and adjacent non-PC devices such as tablets, smartphones, l on-board computing and other smart devices.

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