Lenovo Group (00992.HK) generated US$14.41 billion in second quarter revenue and a gross profit margin of 17.5%, a record high in the second quarter.
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Gelonghui November 16丨Lenovo Group (00992.HK) announced its interim results. In the six months ended September 30, 2023, it achieved revenue of US$27.310 billion, an increase from the previous quarter for two consecutive quarters. Gross profit was US$4.774 billion, gross profit margin was 17.5%, and profit attributable to equity holders of the company was US$426 million. In the second quarter, revenue was US$14.41 billion, gross profit was US$2.522 billion, gross profit margin was 17.5%, and profit attributable to equity holders of the company was US$249 million.
In addition, the board of directors announced the distribution of an interim dividend of HK8.0 cents per share for the six months ended September 30, 2023, totaling approximately US$124.3 million, which will be distributed to shareholders registered in the company’s shareholder register on November 30, 2023 (Thursday) shareholders. The interim dividend will be paid on or about December 13, 2023 (Wednesday).
The Group continued to consolidate its market leadership position and made progress in improving profitability even amid uncertain market conditions. The Group is unswervingly committed to accelerating transformation and seizing the rebound in product demand, laying a solid foundation for sustainable growth. The emergence of new applications (such as artificial intelligence), the global digital transformation cycle and “new IT” demands not only heralds the long-term growth of the industry, but also enhances the group’s market competitiveness, allowing the group to gradually increase profitability. As a high-priority growth engine of the Group, the Solution Services Business Group leads the Group’s service-led transformation by expanding value-added solutions for its broad customer base. The total contract value of the Solution Services business group increased by 13% year-on-year, while the total contract value of infrastructure as a service increased at twice the average level. The solution services business group’s performance reached a new high, with revenue and operating profit increasing by 14% and 7% respectively year-on-year.
After a challenging first quarter, the second quarter showed signs of strong resilience and improvement. The group’s second-quarter sales grew 12% quarter-on-quarter, exceeding the ten-year average of 9%. However, group sales fell 20% year-on-year (or 18% after currency effects) to $27 billion, primarily due to high base period effects, making year-over-year comparisons more challenging. Both the Intelligent Equipment Business Group and the Infrastructure Solutions Business Group achieved continuous recovery in revenue. The performance of the Intelligent Devices Business Group stood out and became the driving force behind the strong improvement in the group’s revenue performance. Second quarter revenue increased by 12% sequentially, exceeding the historical average of 8% since the establishment of this business segment in the 2018/19 financial year. During the half-year review period, the net profit margin growth in the second fiscal quarter was also exciting, with a quarter-on-quarter increase of 36 basis points, becoming another performance highlight. During the half-year review period, profit attributable to equity holders reached US$426 million, a 60% decrease from the highest level in the same period last year when market conditions were more ideal.
With prudent working capital management, the group’s cash conversion period remained negative in the quarter, with negative four days, one day less than the same period last year. Inventory conditions have steadily improved, with the end-quarter balance down more than $2 billion from a year ago due to lower raw material inventories. Overall, accounts receivable and inventory days combined improved nine days year over year, offset by a decrease in accounts payable days.