LENOVO POSTS US$189 M LOSS

Group’s PC, smartphone units hit by shrinking market, fierce competition

CHINESE personal computer (PC) maker Lenovo Group swung to its biggest annual loss in nine years as higher component costs, an expected tax writedown and lower income from asset disposals overshadowed growth in revenue.

The company, which lost the world’s largest PC maker crown to HP Inc last year, has seen its core PC business suffer from a shrinking market globally, while its smartphone business struggles to stay ahead of fierce competition.

For the year ended March, Lenovo’s revenue rose five per cent to a three-year high, but the company still posted loss attributable to shareholders of US$189 million (RM752.9 million), versus a US$535 million profit a year ago.

This was the company’s biggest loss since 2009 and wider than an average analyst estimate for a loss of US$161.3 million from 17 analysts polled by Thomson Reuters.

Lenovo’s annual results were also hit by a US$400 million writedown in deferred income tax assets to reflect a lower United States corporate tax rate.

Underlying business conditions continue to be tough, with worldwide PC shipments down 1.4 per cent from a year ago in January through March, the 14th consecutive quarter of decline for the industry, according to data from Gartner.

Lenovo’s net profit over the three months plunged 69 per cent to US$33 million, partly reflecting increased component prices and continued losses in the company’s non-core smartphone and data centre businesses. The profit, however, beat a consensus estimate of US$27.7 million.

Revenue for the period rose 11 per cent to US$10.6 billion, pushing full-year revenue to US$45.35 billion.

The company’s PC and smart devices business posted a two per cent drop in profit for the year despite an eight per cent growth in revenue.

Lenovo said the segment would “focus on reducing losses in new fiscal year” by focusing on profitable markets such as Americas.