Lenovo Q1 profit more than doubles to beat expectations, shares jump

SHANGHAI :China's Lenovo Group Ltd, the world's biggest maker of personal computers, on Wednesday posted a better-than-expected jump in first-quarter profit as COVID-19 curbs continued to spur work-from-home demand.

Shares in the company rose by as much as 9.7per cent after its results, and were on course for their biggest daily percentage gain since March 30.

Profit for the quarter ended June 30 rose 119per cent to US$466 million, versus US$213 million in the same quarter last year, and above an average estimate of US$345.23 million from six analysts, according to Refinitiv data.

Revenue rose 27per cent to US$16.9 billion from US$13.3 billion a year earlier. Analysts expected revenue of US$16 billion. It also posted net income margin of 2.8per cent, which the company said was the highest in many years

Lenovo said a recovery in IT spending was fuelling demand and supporting higher average selling prices of its products, and it expected the total personal computer market would continue to grow over the next five years.

"The accelerated digital and intelligent transformation has created significant market opportunities globally," Lenovo's Chairman and CEO Yuanqing Yang said in a statement.

"We will continue to increase R&D investment, aiming to double it over the next three years."

The results were the first earnings released by the company since it reorganised its business groups in February.

Analysts say pandemic-driven consumer demand for PCs is starting to slow, but shortages of components like chips, driven by stronger-than-expected global demand for PCs, tablets, and electronic cars, remain an industry concern.

Worldwide shipments of personal computers rose 13per cent year-on-year to hit 82.3 million units in the second quarter of 2021, with desktop shipments growing for the first time since the fourth quarter of 2019, research firm Canalys said in a report https://www.canalys.com/newsroom/Canalys-global-PC-market-Q2-2021 last month.

Lenovo extended its industry lead, shipping more than 20 million units for the third consecutive quarter to take 24.4per cent market share, compared with HP Inc with 22.6per cent and Dell with 17per cent, Canalys said.

(Reporting by Brenda Goh; Additional reporting by Donny Kwok in Hong Kong; Editing by Christopher Cushing, Jane Wardell and Kim Coghill)