Lenovo Group slipped to a loss in its fiscal Q1 after experiencing higher costs in its mobile and PC businesses, which it said was due to shortages of components.
The $72 million loss in the three months to 30 June was the China-based handset vendor’s first quarterly loss in two years, and compares with a net profit of $173 million in the same period of 2016. Revenue, meanwhile, remained flat at $10 billion.
During the recent quarter, Lenovo launched new products including the Moto Z2 Force, which also led to an increase in marketing and branding costs.
Smartphone shipments in the period reached 11 million, with the company significantly boosted outside of its home market on the back of gains in Western Europe and Latin America. Shipments in those markets increased 137 per cent and 56 per cent respectively year-over-year.
Revenue for the mobile business group (MBG), which includes Moto and Lenovo branded phones, was also, in effect, boosted outside of China, hitting $1.7 billion, a 7.6 per cent year-on-year increase.
The company added it achieved its goal of “selling 3 million Moto Z smartphones within the first 12 months”.
Despite the Q2 loss, Lenovo’s chairman and CEO Yang Yuanqing was buoyant about the results.
“We have made solid progress on every front of our strategy. Particularly MBG continued to improve, and is on track to break even by second half of this year. Data centre group gained good momentum as well. As the new growth engines gain speed, we believe the sustainable results will soon follow.”
Revenue from Lenovo’s largest business of PC and smart devices of $7 billion was flat compared with the same period of 2016.