Lenovo Group, the world’s largest PC maker, broke expectations, with net profit jumping 31% in the first quarter, as the coronavirus pandemic prompted companies to move to remote work and schools to online learning.
The Chinese giant said that consumers stranded at home are also spending more on PCs and other smart devices for entertainment purposes.
Net profit for the quarter from April to June was US$213 million (approximately Rs 1593 crore), almost twice the market expectation, while revenue increased by 7% to US$ 13.3 billion (approximately Rs 99,512 crore) .
In particular, sales in China soared by 17%, while sales in Europe, the Middle East and Africa soared by 28%. However, due to declining demand for smartphones in Latin America and a shortage of Chromebook components in North America, sales in the Americas fell by 9%.
Lenovo Group Chairman Yang Yuanqing said in the briefing: “The Chinese government is promoting domestic consumption-of course, we should use this to develop our business. The performance of the last quarter proves that our position in China is very strong.”
Yang told Reuters in a subsequent interview that there is still more room for growth in China’s demand. The PC penetration rate in China is still between 20% and 30%, while the penetration rate in the United States is 70%.
He said that Lenovo’s sales volume during China’s June 18th Shopping Festival was strongly promoted by the e-commerce platform and has doubled in the previous year. He said: “After COVID-19, we did see a strong rebound.”
According to data from research firm Gartner, global PC sales increased by 2.8% in the April-June quarter due to suppliers restocking their channels and increasing demand for mobile PCs.
Lenovo maintains a leading position in the field of personal computers, with a 25% market share, ahead of HP and Dell Technologies, with 24.9% and 16.4% respectively.
Lenovo shares closed down 3%, and jumped earlier this week due to expected strong performance.
© Thomson Reuters 2020