Business structure adjustment: Lenovo's smart device revenue fell 21%

Lenovo Group announced its financial report as of March 31, 2023, dated May 24. According to the announcement, Lenovo Group’s total sales last year were approximately US$61.947 billion, a 14% decrease from the same period last year.

The financial report shows that Lenovo Group’s business group, including personal computers, tablets, smartphones and other smart device businesses, saw its revenue fall by 21% year-on-year. Lenovo explained the decline as the industry faces pressures from excess channel inventory, conservative customer spending and currency fluctuations.

Lenovo Group's segment profit margin fell 31 basis points year-on-year to 7.3%. Profit from one of the divisions of the smart device business group fell 24% year-on-year due to ongoing macro challenges and pressure to reduce excess inventory in the channel. However, Lenovo Group also pointed out that the revenue of the Infrastructure Solutions Business Group and Solution Services Business Group hit a record high, with year-on-year increases of 37% and 22% respectively.

According to the editor’s understanding, the financial report also pointed out that non-personal computer business increased by 7%, accounting for nearly 40% of the combined revenue of Lenovo Group’s three business groups, a year-on-year increase of 7 percentage points. However, the PC business was weighed down by continued macro headwinds, causing Lenovo's total revenue to decline 14% to $61.9 billion, with currency fluctuations having a negative impact of 5% on revenue. Profit attributable to equity holders fell 21% to $1.6 billion. However, after excluding one-time restructuring and other charges, the profit fell by 10%. Net profit calculated in accordance with non-Hong Kong financial reporting standards fell 13%.

Lenovo Group stated that its net cash position throughout the year has remained stable, with a balance of US$366 million at the end of the year, and its cash conversion cycle has also improved by 12 days.

Taken together, Lenovo Group faces challenges and pressures in the industry, and its financial reports reflect the downward trend in total sales and profits. Lenovo's strong growth in its infrastructure solutions business group and solution services business group has had a certain positive impact on it. Lenovo Group expressed that they will continue to work hard to respond to market changes and challenges in order to maintain the company's steady development momentum.

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