Maintaining profitability by reinforcing core PC business and improving cost structure
Annual revenue stood at US$44.9 billion, down 3% from the previous year.

Lenovo (www.lenovo.com/kr) announced its financial results for the fourth quarter and the full year of the fiscal year ended March 31, 2016. Despite internal and external factors impacting revenue, Lenovo succeeded in maintaining profitability while strengthening its core PC business and improving its cost structure.

Fourth-quarter revenue fell 19% year-over-year to US$9.1 billion, while annual revenue decreased 3% year-over-year to US$44.9 billion. Through organizational restructuring and improvements to its cost structure, Lenovo saved US$690 million in costs in the second half alone, and boosted its pre-tax profit (PTI) in the fourth quarter to US$193 million, an 86% increase year-over-year.

The annual pre-tax loss was $277 million, and net income for the fourth quarter reached $180 million, up 80% from the previous year. On the other hand, despite reflecting $330 million in non-cash M&A-related accounting expenses, the annual net loss was only $128 million.



Lenovo Chairman and CEO Yang Yuanqing said, “In the last quarter, there were many difficulties not only in the overall economy but also within the industry, which had a negative impact on our core product lines. However, by taking bold measures in the middle of the fiscal year, we were able to preserve profitability.” “In particular, our core PC business unit served as a pillar of support, and the enterprise division has also continuously improved profitability. In addition, we were able to confirm positive growth drivers in some major smartphone markets,” he said.

Furthermore, the company explained, “Regarding business operational issues, Lenovo has already taken various positive measures in areas such as organizational restructuring, management composition, products, and sales channels. These measures are intended to restore growth momentum in the mobile sector and establish a new operating system for diverse businesses, through which we plan to enhance the productivity and creativity of each business unit. At the same time, we intend to capitalize on the new opportunities presented by a balanced combination of devices and cloud by combining our existing strong capabilities in end-user products with newly acquired competitiveness in cloud and infrastructure.”

Lenovo’s annual gross profit was US$6.6 billion, down 1% from the previous year, and fourth-quarter gross profit was US$1.5 billion, down 15%. Gross profit margins were 14.8% annually and 16.6% in the fourth quarter, with an annual operating loss of US$62 million. Fourth-quarter operating profit was US$248 million, marking 95% growth year-over-year. Basic EPS for the fourth quarter was US$1.63 cents (HK$12.67), and the annual basic loss per share was US$1.16 cents (HK$9.00). The Lenovo Board of Directors resolved to pay a final dividend of US$2.64 cents (HK$20.5) per share for the fiscal year ended March 31, 2016.