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Lenovo pushes PCs higher

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Despite global decline in PC sales, Lenovo today announced another jump in sales, as well as growth in market share across PCs, smartphones and tablets.

Lenovo Group today announced record full-year revenue of US$38.7 billion, an increase of 14% year-over-year, for its fourth fiscal quarter and full-year ended 31 March 2014.

It also declared a record full-year pre-tax income of US$1.01 billion, up 27% year-over-year, and record full year earnings of US$817 million, up 29%.

Lenovo expanded its number one position in PCs, adding 2.1% of market share to post a record 17.7% total share for the full-year, representing 5% year-over-year growth, compared to an overall industry decline of 8% during this same period.

It’s a group that is very well run, it has a clear strategy, and a very aggressive, resolute, determined set of actions to attack where we want to grow share,” commented Aymar de Lencquesaing, president for Lenovo in Europe, Middle East and Africa, at a press briefing in Beijing today. “There is a constant desire to excel and win, comes from the top but has trickled down pretty deep.

One of the secrets of success, he said, was that it had kept its fabrication plants at a time when other manufacturers were abandoning their own factories.

Ten to 15 years ago there was a trend where the hardware manufacturers decided to go fabless, get rid of factories, so that the balance sheet would look better and they don’t have to maintain the overheads. It looked like a pretty good plan at the time, but for some reason Lenovo bucked the trend.

Lenovo kept their factories and, in hindsight, that proved to be a very smart deal. In theory, the guys who went fabless lose nothing because they keep the engineering in-house. But, effectively, there is a transfer of technology between the brand and the outsourced manufacturer, because the manufacturer is able to propose a wide range of models and technologies, so after a while you lose the ability to innovate. By keeping their factories, Lenovo kept their ability to innovate.

The result is that, even in the most competitive market in the world, China, where the PC market slowed, Lenovo’s operating profit in China PC improved by 1%. The Asia Pacific region had record share of almost 15%, while improving profitability.

For the first time, Lenovo’s EMEA revenue surpassed its China PC revenue in the quarter, while in the US, Lenovo surpassed Apple to take the number three position in PC shipments in the fourth quarter. With 20 consecutive quarters of outgrowing the PC market, Lenovo continued to show it can post rapid growth in absolute shipment and in relative market share metrics, even in difficult markets.

When combining Tablets and PCs together to form the “PC + Tablet” category, Lenovo sold a record 64 million devices, up nearly 18% year over year, outpacing this market by more than 13%. Lenovo posted record total device volume of 114 million, up 37% year over year. This was the 4th quarter in a row that Lenovo sold more tablets and smartphones than PCs.

The record sales and profits that we delivered last year prove that Lenovo can grow and deliver its commitments, no matter the market conditions,” said Yuanqing Yang, Lenovo Chairman and CEO.

Not only did we strengthen our leading position in PCs, but we gained three% in tablets by quadrupling sales volume and became the fastest growing major smartphone company in the world. This demonstrates our capability to manage both businesses that are already mature, as well as those that are shifting to maturity.

Meanwhile, we are building new engines for growth in the enterprise and ecosystem. Through the combination of our existing and new businesses, Lenovo offers tremendous value to shareholders today, and our value will be even greater in the future.

Gross profit for the full year was US$5.06 billion, an increase of 14% year-over-year. Gross margin was 13.1%, while operating profit for the full fiscal year was US$ 1.05 billion, a 32% increase year-over-year.

Lenovo had strong fourth quarter revenue of US$9.4 billion, up 19% year-over-year. The Company achieved pre-tax income of US$212 million during the fourth fiscal quarter, a 28% increase over the same period last year. The Company’s gross profit for the fourth fiscal quarter grew to US$1.24 billion, an increase of 18% year-over-year. Gross margin was 13.3%. Operating profit for the fourth quarter was US$231 million, up 37% year-over-year, while earnings grew 25% year-over-year to US$158 million. Compared to an overall PC industry decline of 4.6% year-over-year in the fourth fiscal quarter, Lenovo grew shipments at a 15% premium to the market.

Click here to read how Lenovo is going its sales and market share around the world.

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