Lenovo said it acted swiftly to position its mobile unit for future growth and profitability and is optimistic cost cutting and a strong performance in the Americas will “yield substantially improved results” in future.
Recent changes in the group include the appointment of Sergio Buniac to lead the business outside of China; the realignment of its product portfolio ahead of coming launches; overall channel inventory reduction; and a strategic market review to identify opportunities for profitable growth.
Lenovo is integrating its Mobile Business Group with its Personal Computer and Smart Devices Group to create the Intelligent Devices Group.
In an earnings statment covering the fiscal Q4 and full year 2018 (to end-March) it said the unit will create efficiencies through a shared global supply chain and services, thus accelerating its “ambitions for growth across the full spectrum of smart devices”.
This is also likely to mean that it becomes more difficult to ascertain the financial performance of the mobile unit, as it is subsumed into a larger operation.
In fiscal Q4 the Mobile Business Group registered a pretax loss of $142 million, compared with a $220 million loss in fiscal Q4 2017. Revenue of $1.34 billion in the recent quarter was down from $1.77 billion.
While Latin America is traditionally strong and North America benefitted from “the strength of mainstream models and carrier expansion”, the company noted challenges in emerging markets led to a decline in shipments, while component costs also remained a difficulty.
On a group level, the company reported a profit attributable to shareholders of $33 million, down from $107 million, on revenue of $10.64 billion, up 11 per cent year-on-year. The company said this was its first double-digit revenue increase in ten quarters.
Lenovo said its bottom line benefitted from a larger tax credit in fiscal Q4 2017.
In the recent period the Personal Computers and Smart Devices business generated a 16 per cent increase in revenue to $7.7 billion, the highest growth for four years. Lenovo’s Data Center Group increased revenue 44 per cent to $1.2 billion.
For the full year, group revenue of $45.3 billion was up 5 per cent, while it recorded a $189 million loss compared with $535 million in fiscal 2017. The loss was attributed to a non-cash write-off charge of $400 million related to US tax reforms in its fiscal Q3.