Lenovo Group Reports 54% Drop in Net Profit for Q2
By Sherry Qin
Lenovo Group, the world's largest PC maker, has reported a significant decline in its net profit for the fiscal second quarter. The company attributes this decrease to a high base in the same period last year when market conditions were more favorable.
Financial Performance
According to Lenovo, the net profit for the three months ended September was $249 million, representing a decline of 54% compared to a profit of $541 million in the same period last year. However, the result surpassed analysts' expectations of $236 million in a FactSet poll.
In terms of revenue, the company experienced a 16% year-on-year decrease, reaching $14.41 billion. Despite these challenges, both its main product segment (including PCs, smartphones, and other devices) and its infrastructure-solutions business have shown signs of recovery in revenue on a sequential basis.
Outlook and Market Analysis
Lenovo's PC business is currently stabilizing and is well-positioned for a year-on-year recovery in the last quarter of 2023. As an encouraging sign, the company's inventory position has strengthened steadily, shrinking by over $2.0 billion compared to the previous year.
While the total available market for the global PC sector is expected to regress to pre-Covid levels in the short term, there is potential for it to remain at a structurally higher level in the long term compared to the prepandemic period, according to Lenovo.
Long-Term Strategies
Lenovo reiterates that enhancing profitability remains a medium-term priority for the company. Despite the challenging market conditions, they are focused on implementing strategies to improve their financial performance moving forward.
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