Lenovo maintains strong momentum with profits surging

Chinese tech giant Lenovo Group posted $13.5 billion in revenue in the quarter ended in September, marking its ninth consecutive year-on-year quarter of growth.

The company's pre-tax income grew 45 percent compared to the same quarter a year earlier, to $310 million. Net income also increased 20 percent year-on-year to $202 million.

The result is driven by good performance in its personal computer business, and Lenovo is starting to see returns from emerging businesses including its data center group in China.

Yang Yuanqing, Lenovo chairman and CEO, said, "We were pleased to see our growth momentum deliver continued solid financial performance amid a complex and dynamic global trading environment."

According to him, the company's profitability improved significantly, especially in PC and smartphone business, with the profit margin of its intelligent devices group exceeding 5 percent for the first time.

Specifically, sales volume in its PCs enjoyed strong growth year-on-year of 7.1 percent in the quarter, resulting in overall revenue growth of 4.1 year-on-year for Lenovo's PC and smart devices group.

From July to September, global PC shipments grew 3 percent year-on-year to 70.9 million units, data from market research company International Data Corp show. This is the second consecutive quarterly growth and Lenovo continued to be the largest PC maker in the world, outperforming the global average.

Gianfranco Lanci, president of Lenovo, said the global PC market is likely to remain relatively flat or record slight growth next year. As the Windows 10 refresh cycle in the business market will continue to contribute to the gain, but the sector will also continue to face shortage in supply of CPUs.

Lanci, who is also the chief operating officer of Lenovo, said the company's mobile business, which includes smartphones, has remained profitable for four consecutive quarters, posting good growth in Latin America and the US. In North America Lenovo moved up two places in the industry rankings from the previous quarter to number four.

The company will step up investment in Europe, with focus on four to five countries including UK and Italy, to drive sales of its smartphones in the region. It will also intensify resources into emerging markets including central Africa and some markets

"We can leverage our sound PC infrastructure in these countries for mobile phones," Lanci said, but the senior executive also added that profitability is still the top priority for smartphones.

In the latest quarter, Lenovo's data center group successfully navigated challenging circumstances. Revenue – excluding its hyper-scale storage business – grew almost 13 percent year-on-year, with China reporting more than a 47 percent increase in non-hyperscale–storage revenue compared to the same quarter a year ago.