Lenovo sees profit, warns of price stress

Source: Xinhua | 2017-05-26

CHINA’S Lenovo Group, the world’s largest personal-computer maker, reported a return to profit yesterday but said rising component prices could pressure its bottom line this year as supply shortages extend to batteries.

Profit reached US$535 million in the year to March on revenue that fell 4 percent, just missing analyst estimates. The news sent Lenovo shares up as much as 6 percent in Hong Kong trade.

The result comes as Lenovo navigates a PC market that has shrunk markedly since the advent of tablet computers. According to researcher Gartner, global PC shipments fell for the 10th consecutive quarter in the January-March period, dipping below 63 million units for the first time since 2007.

Lenovo’s annual shipments fell 1 percent versus a market decline of 3 percent, with its share rising 0.4 percentage points to a record 21.4 percent. Revenue in its PC and smart devices unit — which makes up 70 percent of the total — fell 2 percent.

Lenovo blamed the declines on transition in the company’s smartphone and data center businesses, as well as on a difficult macro-environment and component supply constraints.

Memory shortage is likely to continue this year, particularly solid-state drives, pushing up parts costs, Corporate President and Chief Operating Officer Gianfranco Lanci said at an earnings briefing.

“We are starting to see shortage in batteries,” Lanci added. “That is mainly because of cars consuming many more batteries than before.”