Lenovo Reports 24 Percent Fall in Quarterly Revenue as PC Sales Decline

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Lenovo Reports 24 Percent Fall in Quarterly Revenue as PC Sales Decline

China’s Lenovo Group on Thursday posted a worse-than-expected 24 percent fall in revenue for the April-June quarter, hit by a prolonged slump in global demand for personal computers.

It makes four consecutive quarters that the world’s largest PC maker has suffered a sales decline and comes after Lenovo reported a 14 percent drop in annual profit for the year that ended in March, its first annual decline since 2019.

Revenue in the April-June quarter fell to $12.9 billion (roughly Rs. 1,07,200 crore), below a $13.84 billion (roughly Rs. 1,15,100 crore) average of seven analyst estimates compiled by Refinitiv.

Lenovo shares fell as much as 6 percent in Hong Kong after the earnings release, compared with a 0.72 percent decline in the benchmark index.

The COVID-19 pandemic gave a huge boost to electronics sales as consumers and companies alike stocked up or upgraded to accommodate a shift to remote work. However, revenue started contracting last year as demand began to fall, weighed down by rising interest rates and soaring inflation.

The pace of the recovery ******** weak and many retailers still have unsold inventory, forcing PC makers and their suppliers including chipmakers to adjust production volume and prices.

“The group’s PC business is stabilizing and well-positioned for a year-on-year recovery in the later part of 2023,” Lenovo said in a statement.

Global PC shipments fell by 12 percent in the second quarter of 2023, according to market research firm Canalys, a big improvement from a more than 30 percent drop in the preceding two quarters.

To improve profit margins, Lenovo has been expanding non-PC businesses such as servers and information technology (IT) services, but its device business that includes PCs, smartphones and tablets still accounted for nearly four-fifths of group revenue.

Net income attributable to shareholders tumbled 66 percent to $177 million (roughly Rs. 1,500 crore), versus analysts’ $212.49 million (roughly Rs. 1,800 crore) estimate.

© Thomson Reuters 2023

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