China's Lenovo beats chip shortage to post 65% rise in second-quarter profit

xizhimen · Nov 4, 2021

China's Lenovo beats chip shortage to post 65% rise in second-quarter profit

Lenovo's profit for the quarter ended Sept 30 attributable to equity holders jumped to US$512 million, up from US$310 million in the same period last year.PHOTO: REUTERS

November. 4 2021

SHANGHAI (REUTERS) - China's Lenovo Group, the world's biggest maker of personal computers, reported a 65 per cent rise in second-quarter profit on Thursday (Nov 4) and said it was able to outgrow the market by securing more components amid a global chip shortage.

Profit for the quarter ended Sept 30 attributable to equity holders jumped to US$512 million (S$691 million) versus US$310 million in the same period a year earlier. Lenovo said it remained on track towards its goal of doubling profitability in three years.

Revenue rose 23 per cent to US$17.9 billion, slightly above an average estimate of US$17.3 billion from nine analysts, according to Refinitiv data.

"The industry-wide component shortage of various integrated circuits remained a business challenge, causing delays in order fulfilment and significant backlog orders across PCs, smartphones, and servers," it said in a statement.

"The group was able to excel in operational efficiency by securing more supply of components than peers to outgrow the market."

It also said it saw strong sales growth in China and America, but a decline elsewhere in the Asia Pacific due to fewer educational deals in Japan.

Growth in worldwide PC shipments slowed in the September quarter as the easing of anti-virus measures and the rising availability of Covid-19 vaccines shifted consumer and educational spending away from PCs to other priorities, according to research consultancy Gartner.

Lenovo retained the title of largest worldwide PC vendor by shipments, though its growth slowed after five consecutive quarters of double-digit growth, Gartner said. In the third quarter, Lenovo's global market share grew 1.8 per cent to 23.7 per cent.

Shares in Lenovo tumbled last month after it abruptly withdrew its application for a 10 billion yuan (S$2.1 billion) share listing in Shanghai, days after it had been accepted by Shanghai's Star Market.

But its Hong Kong shares are still up more than 70 per cent over the past year, boosted by strong demand for electronics as more people work from home.