China’s Lenovo Group has reported a first-quarter revenue increase and a doubling of its net income thanks to pandemic-driven demand for PCs.
Shares in Chinese PC manufacturer Lenovo jumped after the company announced it had achieved a better-than-expected increase in first-quarter profit, which the company ascribed to “accelerated digitalisation” due to the pandemic.
Lenovo’s first-quarter revenue increased to $16.9bn, up 27pc year on year. Net income more than doubled (up 119pc) as net income margin reached 2.8pc, the highest in many years.
“The accelerated digital and intelligent transformation has created significant market opportunities globally,” Lenovo chair and CEO Yuanqing Yang said.
“Lenovo is successfully seizing these as we transform from a device company to a services and solutions provider. The proof is in our performance – this quarter alone we’ve doubled profitability year-on-year while net income margin reached the highest in many years.”
The company has plans to continue capitalising on this performance growth by investing further in innovation and R&D. Lenovo increased its R&D expense in the first quarter by 40pc compared to the same period last year and it plans to double its R&D investments over the coming years.
“Going forward, we will continue to increase R&D investment, aiming to double it over the next three years,” Yang added. “We will further improve our operational excellence and we remain committed to green innovation and corporate citizenship to achieve long-term sustainable profitability increases.”
This is Lenovo’s first quarterly report under its new business structure, which was announced earlier this year.
Its new solutions and services group focuses on rapid growth sectors such as solution services and SaaS. Meanwhile, its infrastructure solutions group focuses on hybrid cloud solutions, edge computing and 5G cloud-network convergence, and its intelligent devices group looks at smart IoT.
All groups reported strong revenue increases.
“In the coming years, we will continue to focus on high-margin businesses including solutions and services, particularly, as-a-service business, infrastructure upgrades, premium PC and adjacent non-PC devices,” Yang said.