Lenovo second quarter profit up 88% to $144mn

The PC maker becomes the world’s second-largest PC vendor, with record market share of 13.5%.

Lenovo Group reported Wednesday results for its second fiscal quarter ended September 30, 2011. Demonstrating the Company’s rapid growth, Lenovo has become the world’s second-largest PC vendor, just one quarter after being named the world’s third-largest PC vendor. During the second quarter, Lenovo’s worldwide PC shipments grew 35.8 percent year-over-year, seven times the PC industry growth rate of 5.0 percent worldwide for the same period. This is the tenth consecutive quarter that Lenovo has grown faster than the industry and the eighth quarter in a row that Lenovo has grown the fastest among the top four PC vendors.

With a continued focus on balanced growth across all markets, product lines and customer segments, consolidated sales for the second fiscal quarter increased 35.2 percent year-over-year to a record US$7.8 billion. Lenovo also recorded its highest-ever worldwide quarterly market share of 13.5* percent, and gained share points in China, mature markets and emerging markets alike.

At the same time, net earnings for the Company increased a whopping 87.9 percent during the second fiscal quarter, as profit attributable to equity holders for the quarter totaled US$144 million.

Lenovo’s gross profit for the second fiscal quarter increased 59.8 percent year-over-year, to US$948 million, with gross margin at 12.2 percent. Operating profit for the second quarter was US$166 million, a 55.3 percent increase over the second quarter last year. Lenovo’s second quarter pre-tax income was US$165 million, up 62.3 percent year-over-year.

Basic earnings per share for the second fiscal quarter was 1.41 US cents, or 10.99 HK cents.

Net cash reserves as of September 30, 2011, totaled approximately US$ four billion. The Board of Directors declared an interim dividend of 3.8 HK cents per share, according to a Lenovo report.

“Lenovo’s performance this quarter was outstanding. Despite significant investments for future growth, pre-tax income increased and the Company over-achieved its targets,” said Liu Chuanzhi, Lenovo chairman. “The management team developed strategies in the right way, built a solid corporate culture and the morale of the whole staff is very high. The Board is very satisfied.”

‘In just two quarters, Lenovo has gone from the number four to the second largest PC vendor in the world. We achieved balanced growth across all markets, product categories and geographic regions. In China, we continued to extend our lead, while in Emerging Markets we have been growing more than three times the market growth rate. Including the successful integration of both the NEC and Medion businesses in Mature Markets, we recorded for the first time a turnover exceeding that of the China market. Not only has profitability substantially increased, but also with record market share,” said Yang Yuanqing, Lenovo CEO. 

“We are very optimistic about the future of the PC industry. Our aspiration is not only to be the leader of traditional PCs, but to also accomplish much more in the extended PC categories, such as the smartphone and tablet.”