Heaptalk, Jakarta — On last February, the Lenovo Company Group announced its record revenue in the third quarter of US$ 17.2 billion, up 22% year-on-year. This result was the second consecutive record-breaking quarter due to the growth in all core business groups and the Company’s transformation business.
The Company managed to set a new record, with Q-3 pre-tax income up 52% year on year to US$ 591 million, while the net profit also increased 53% to US$ 395 million. Lenovo sustained growth has demonstrated that Lenovo can adapt and capitalize on the opportunities to meet the trend of working, studying, and playing from home. At the same time, transformation investment also continues to open new opportunities for long-term growth.
The company reported the third quarter’s basic earnings per share to reach 3.31 US cents or 25.66 HK cents.
“This record-breaking quarter reflects our product innovation and operational excellence, which drove growth across all business,” said Yuanqing Yang, Lenovo Chairman, and CEO. “It is clear that 2020 is a full challenging year that brings many new challenges to our life.
However, Lenovo responded quickly to the market change impacted by the new trend in working and lifestyle. Now, we can see our investment transformation result, so that we will keep invest in technology and innovation, encourage smart transformation in all industry, and create sustainable growth.”
Business Outlook
Various challenges in 2020 continue to appear, such as geopolitical uncertainties, lack of component supply due to the strong demand, and the COVID-19 pandemic. Even though, as a company that operates in 180 markets and has more than 30 manufacturing sites worldwide, Lenovo‘s business prospect in 2021 remains positive. The new trend of working, learning, and playing from home will continuously drive long-term- and sustainable growth of device demand and cloud/infrastructure requirements.
Business Group Overview
Intelligent Devices Group (IDG) Lenovo regularly lead the PC and Smart Devices Group (PCSD) growth in other historical quarters. The Company earns an income of US$ 14 million, up 27% year on year, followed by PTI that up 35% year on year to US$925 million and a record profit margin of 6.6%.
Lenovo‘s operation excellence supports this result in meeting the market demand that continues to increase globally and Lenovo’s innovative product portfolio that quickly adapts to capture customers’ demand of working, learning, and playing from home.
Lenovo‘s action to focus on its innovation and high growth segment maintained its position as the #1 Group Company in PC devices worldwide with a record of 25.3%. All sites demonstrated strong performance; even North America’s growth reaches 60% year on year.
For the first time, Europe and the Middle East (EMEA) were ranked #1 in the market, profitability in Asia-Pacific results in the new record and increased 30% year on year in China. The growth shown in the PC device market proves a significant shift in the long-term and sustainable technology sector since the pandemic.
The new data from IDC confirmed that the total sales successfully reach 300 million units in 2020 due to the robust schedule in Q-4. This result strengthens Lenovo‘s belief that the lifestyle trend of working, learning, and playing from home will create the ‘one device for one person’ trend and always enhance long-term PC, Tablets, and other smart device requirements.
Lenovo will focus on developing its innovation to capture consumers’ new needs and operational excellence to meet strong demand in the future.
Our second unit business, Mobile Business Group (MBG), provided double-digit revenue growth year on year and recovered from the impact of COVID-19 by generating profitability and achieving the highest profitability since the company acquired the Motorola business. Reliable performance in North America and Latin America constructs rapid expansion in Europe and Asia, successfully performing enhancement into double or triple-digit due to the expansion of operator relation and stronger product affiliation. Lenovo continues to utilize its strong product portfolio and 5G innovation to continue its profitable growth.
Data Centre Group (DCG) successfully attained an income of US$ 1.63 million due to comprehensive growth and the profitability enhancement that reached almost one-point year on year. The Cloud Service Providers and Enterprise/SMB segment experienced growth in all markets year on year. Enterprise/SMB reach an income of US$ 1 million, the highest amount in over three years, while Storage generated income and outgrew the market by 11 points.
Software-Defined Infrastructure and Services revenue also performed new records. TruScale Private Cloud Infrastructure-as-a-Service from Lenovo combined with HANA Enterprise Cloud from SAP is acceptable for people and produces high demand. For this reason, Lenovo extended its 1st position in TOP500 supercomputer. In the future, we will capture Hybrid Cloud and IT Infrastructure and continuously grow in all markets while improving profitability.
Lenovo‘s Intelligent Transformation strives to perform immense progress with Software and Services* total revenue up almost 36% or almost US$ 1.4 million that brings Lenovo to achieve new record- more than 8% of the total Group income. Attached Services, Managed Services, and Solution Services revenue increased year on year that almost reaches 26%, 73%, and 49% respectively, while Device-as-a- Service up double-digit higher (74%) year on year. Furthermore, e-commerce revenue up to almost 45% year on year and keep result new record. This excellent attainment delivered the importance of Intelligent Transformation to drive long-term growth. Looking forward, Lenovo continues to predict opportunities by utilizing its experience and capabilities to build a solution for smart manufactures, education, and health-care.
New Organizational Structure for FY21/22
This month, Lenovo also announced its new organizational structure to maximize the opportunities of the Company’s service-led transformation growth. Start from 1st April 2021, Lenovo will effectively merge solution and services teams with all Company’s capability to form a dedicated organization, namely Solutions & Services Group (SSG). SSG will further bring changes to the Company by delivering additional business across smart vertical, attached services, managed services, and our’ as offering service’, includes Daas and Truscaletm.
Through this, Lenovo will be structured into three main business groups according to the Company’s 3S strategy, Smart IoT, Smart Infrastructure, and Smart Verticals. Namely, IDG (Intelligent Devices Group) focused on Smart IoT; ISG (Infrastructure Solutions Group, previously is DCG, Data Center Group) – focused on Smart Infrastructure; and SSG – focused on Smart Verticals & Services. In global, IDG will be led by Luca Rossi (currently SVP & President of PCSD in EMEA and Latin America). Kirk Skaugen will continuously lead ISG while Lenovo Solution & Services, current form, will be led by Ken Wong (SPV & President PCSD in Asia-Pacific).
In addition, Lenovo‘s sales organizations in the market around the world will be held by China GEO and International Sales Organization, led respectively by Liu Jun (EVP & President of IDG in China) and Matt Zielinski (SVP & President of PCSD di North America), to enhance better synergy and efficiency between the business group. These five leaders will directly report to Yuanqing Yang and sit as Lenovo Executive Committee or LEC.
Gianco Lanci, President of COD Lenovo, also announced his plan to retire from the Company in September 2021. Until that time, he will continuously sit as President and Chief Operating Officer of Lenovo Group and has duties for Lenovo‘s global business operations in all Business and Sales Group.
