Business Wire

Lenovo Group: Full Year Financial Results 2021/22

Share

Lenovo Group (HKSE: 992) (ADR: LNVGY) today announced record fiscal year results for the Group, with historic highs for both profit and revenue. Annual net income reached the US$2 billion mark, up 72% year on year, with revenue growing by US$10 billion for the second year running to over US$71 billion. All main business groups were profitable for the full fiscal year - with strong growth momentum in mobile, infrastructure, and solutions and services businesses.

Lenovo successfully overcame macro-environmental challenges and demonstrated both agility and resilience as it navigated industry-wide supply shortages, pandemic disruption, geopolitical uncertainties, and higher inflation to deliver a record year.

The digital and intelligent transformation trend continues to accelerate, presenting the Group with strong growth opportunities. More than 50% of companies now have digitalization as part of their corporate strategy, up from just over one third two years ago. The hybrid work model is a long-term change that will continue to drive strong demand not only for smart devices and data center infrastructure, but also for scenario-driven solutions such as smart collaboration, smart home, and smart office.

Lenovo continued to strengthen its competitiveness to drive sustainable profitable growth. It has already made strong progress toward doubling R&D investments within three years from fiscal year 2021/2022, up 43% year on year to US$2 billion. And will continue to realize its ESG goals and commitments. The company is confident that by leveraging its clear strategy, competing with its unique competitive advantage of global-local model, and the right balance between innovation and efficiency, it can overcome any challenges to capture opportunities.

Lenovo’s Board of Directors declared a final dividend of 3.8 US cents or 30.0 HK cents per share for the fiscal year ended March 31, 2022.

Financial Highlights:

FY 21/22

US$ millions

FY 20/21

US$ millions

Change

Q4 21/22

US$ millions

Q4 20/21

US$ millions

Change

Group Revenue

71,618

60,742

18%

16,694

15,630

7%

Pre-tax income

2,768

1,774

56%

520

380

37%

Net Income (profit attributable to equity holders)

2,030

1,178

72%

412

260

58%

Basic earnings per share (US cents)

17.45

9.54

7.91

3.52

2.19

1.33

Chairman and CEO quote – Yuanqing Yang:

“Although last year was challenging for the world, with the accelerated global digital and intelligent transformation, Lenovo delivered a record year of profit and revenue,” said Yuanqing Yang, Lenovo Chairman and CEO. “All our main businesses are now profitable for the full year, and our new growth engines – SSG, ISG and Mobile – are showing strong momentum. We will capture this window of opportunity, double our R&D investment, drive service-led transformation, realize our ESG goals, and stay flexible and resilient to bring the entire company to new heights.”

Solutions and Services Group (SSG): delivering strong growth and high margins - driving higher overall profitability for the Group

Opportunity:

The trillion-dollar IT services market continues to expand. With the hybrid work model, the demand for digital workplace services is expected to reach US$93 billion by 2025. Equally, research is showing that more than 90% of CIOs are willing to consider adopting as-a-service offerings.

FY21/22 performance:

  • In the last year SSG delivered high profitability and high growth, with revenue reaching an all-time high of US$5.4 billion, up almost 30% year on year. Operating margin was 22%.
  • There was strong double-digit growth across all segments, in particular for managed services where revenue grew more than 60% year on year, with strong growth from the TruScale as-a-service business. Project and solution services saw revenue grow 28% year on year, as vertical solutions more than doubled on the previous year.
  • Revenue from managed services and project and solution services now accounts for almost half of SSG’s business.

Sustainable Growth:

  • SSG continued to invest in software tools, platforms, and repeatable vertical solutions with Lenovo’s own IP, focusing in particular on driving deeper in vertical solution capabilities in the key industries of manufacturing, retail, healthcare, education, and smart cities.
  • TruScale as-a-service continued to expand to include broader digital workplace solutions, and the company developed hybrid cloud solutions.
  • Further exploration of Metaverse solutions continues to be a focus.

Infrastructure Solutions Group (ISG): profitable with record revenue

Opportunity:

ISG continued to benefit from the ICT infrastructure upgrade where the data center market alone is expected to reach US$183 billion by 2025, Edge infrastructure is anticipated to exceed US$41 billion, and the hybrid cloud market will exceed US$120 billion. With data creation expected to double by 2025, the opportunities for data processing and storage will continue to grow.

FY21/22 performance:

  • ISG hit an important milestone, becoming profitable over the full year, with record revenue of US$7 billion, up more than 13% year-on-year.
  • All parts of the high-value businesses such as storage, software, services, and HPC set individual revenue records.

Sustainable Growth:

  • ISG continued to grow premium to the market by enhancing its full stack capabilities that cover both Cloud Service Provider (CSP), and Enterprise/Small and Medium Business (SMB) segments.
  • Investments in in-house design and manufacturing capabilities will continue, while expanding into fast-growing areas such as edge and cloud services.
  • ISG further differentiated with green technology such as its Neptune Liquid Cooling system.

Intelligent Devices Group (IDG): record revenue, profitability growth

Opportunity:

The market for smart devices continues to benefit from the new normal of hybrid work. While consumer PC demand may slow in the short term, commercial demand remains strong. IoT endpoint shipments are expected to reach US$2.3 billion in 2025, and the smart collaboration market is expected to surpass US$80 billion by 2025.

FY21/22 performance:

  • Revenue exceeded US$60 billion for the first time, up 18% year-on-year, and profitability improved by almost US$1 billion year-on-year.
  • PCs maintained the #1 position as all premium segments delivered year-on-year revenue growth of more than 30%.
  • Smartphone revenue outgrew the market by 30-points, while doubling operating profit to more than US$360 million, a record since the acquisition of Motorola Mobility.
  • Expansion beyond PCs continues and now more than 18% of IDG revenue comes from other smart devices, embedded computing/IoT, and scenario-based solutions.

Sustainable Growth:

  • Lenovo continues its strategy of investing in innovation, particularly in premium segments, to extend its leading position in PCs while maintaining industry-leading profitability.
  • Further expansion in smartphones, tablets, embedded computing/IoT, and scenario-based solutions such as Smart Collaboration, Smart Home and Smart Office, continues to provide new growth engines.

Q4 Performance

In Q4, despite the disruption to supply and production due to COVID-19 outbreaks in China, Lenovo still closed the final quarter of the year with strong results. Fourth-quarter net Income achieved a year-on-year improvement of more than 50% and revenue grew almost 7% year on year to US$16.7 billion, with all three business groups contributing to the company’s profitable growth. SSG revenue grew 28% and improved its operating margin by more than 1 point year on year. ISG sustained its profitability for the second quarter. IDG improved its operating margin year on year for the 18th consecutive quarter.

Operational highlights and investing for the future

R&D investment - Lenovo recently set out its bold vision for the year ahead that includes hiring 12,000 R&D professionals around the world over the next three years as part of its commitment to double Research and Development investment. Last year, R&D investment grew 43% year on year to reach a historic high exceeding US$2 billion. R&D headcount grew 48% year on year, surpassing 15,000 with one in every five employees now working in R&D. Investments are focused on the New IT architecture, or client-edge-cloud-network-intelligence, and are balanced to optimize between short, medium, and long-term payback.

ESG commitments – After exceeding its 2020 emissions reduction goals a year ahead of schedule, Lenovo has committed to a vision to achieve net-Zero by 2050 and is working with the Science Based Target Initiative to establish goals that support this vision. Lenovo has reported on sustainability topics since 2008, including outlining its work and goals around climate change mitigation, the circular economy, and sustainable materials. In addition to the net-zero vision, Lenovo has committed to positively impacting 15 million lives through philanthropic programs and partnerships by 2025. The company’s philanthropic arm, the Lenovo Foundation, provides smarter technology for all by empowering underrepresented communities with access to technology and STEM education.

About Lenovo

Lenovo (HKSE: 992) (ADR: LNVGY) is a US$70 billion revenue global technology powerhouse, ranked #159 in the Fortune Global 500, employing 75,000 people around the world, and serving millions of customers every day in 180 markets. Focused on a bold vision to deliver smarter technology for all, Lenovo has built on its success as the world’s leading PC player by expanding into new growth areas of infrastructure, mobile, solutions and services. This transformation together with Lenovo’s world-changing innovation is building a more inclusive, trustworthy, and sustainable digital society for everyone, everywhere. To find out more visit https://www.lenovo.com,and read about the latest news via our StoryHub.

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter and full year ended March 31, 2022

(in US$ millions, except per share data)

Q4
FY21/22

Q4
FY20/21

Y/Y CHG

FY21/22

FY20/21

Y/Y CHG

Revenue

16,694

15,630

7%

71,618

60,742

18%

Gross profit

2,864 

2,688 

7%

12,049

9,768

23%

Gross profit margin 

17.2% 

17.2% 

0 pts

16.8%

16.1%

0.7 pts

Operating expenses

(2,275) 

(2,209)

3%

(8,968)

(7,588)

18%

R&D expenses

(576)

(417)

38%

(2,073)

(1,454)

43%

(included in operating expenses)

Expenses-to-revenue ratio

13.6% 

14.1% 

(0.5) pts

12.5%

12.5%

0 pts

Operating profit

589 

479 

23%

3,081

2,180

41%

Other non-operating income/(expenses) – net

(69)  

(99) 

(30%)

(313)

(406)

(23%)

Pre-tax income

520 

380 

37%

2,768

1,774

56%

Taxation

(99) 

(95) 

4%

(623)

(461)

35%

Profit for the period/year

421 

285 

48%

2,145

1,313

63%

Non-controlling interests

(9) 

(25) 

(63%)

(115)

(135)

(14%)

Profit attributable to equity holders

412

260

58%

2,030

1,178

72%

Earnings per share (US cents)

Basic

3.52

2.19

1.33

17.45

9.54

7.91

Diluted

3.20

1.94

1.26

15.77

8.91

6.86

To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.

Contact information

Press Contacts
Hong Kong – Angela Lee,angelalee@lenovo.com, +852 2516 4810
London – Charlotte West, cwest@lenovo.com, +44 7825 605720
Zeno Group - LenovoWWcorp@zenogroup.com

About Business Wire

Business Wire
Business Wire
24 Martin Lane
EC4R 0DR London

+44 20 7626 1982http://www.businesswire.co.uk

(c) 2018 Business Wire, Inc., All rights reserved.

Business Wire, a Berkshire Hathaway company, is the global leader in multiplatform press release distribution.

Subscribe to releases from Business Wire

Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.

Latest releases from Business Wire

H.I.G. Capital Announces the Sale of DGS S.p.A.11.6.2024 12:00:00 CEST | Press release

H.I.G. Capital (“H.I.G.”), a leading global alternative investment firm with $62 billion of capital under management, is pleased to announce that an affiliate has signed a definitive agreement to sell its portfolio company, DGS S.p.A. (“DGS” or the “Group”), a leading firm in the Italian Information Technology market, to DGS Co-Founders and management team in partnership with ICG, a global alternative asset manager. Since its inception in 1997, DGShas supported blue-chip customers in the design, integration, and maintenance of complex IT systems, with a specialization in digital transformation and cybersecurity services. The Group currently has over 1,900 employees, revenues of approximately €300 million, and maintains a group of highly loyal clientele. During H.I.G.’s ownership, DGS has tripled in size and consolidated its position as a leading Italian firm in cybersecurity services and digital transformation. DGS offers its clients sophisticated and proprietary digital transformation

Evertas Names Nick Selby Head of European Underwriting11.6.2024 12:00:00 CEST | Press release

Evertas, the world’s first crypto insurance company, has named Nick Selby as its new Head of European Underwriting. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240611141887/en/ Nick Selby, Executive Vice President and Head of European Underwriting at Evertas (Photo: Business Wire) Selby, an accomplished information and physical security professional, brings two decades of expertise in public and private sector information security, physical security, and complex incident handling, as well as seven years of experience leading teams securing billions of dollars in cryptoassets. Previously, his roles included VP of the Software Assurance Practice at Trail of Bits, Chief Security Officer at Paxos Trust Company, and Director of Cyber Intelligence and Investigations at the NYPD Intelligence Bureau. “Nick is an extremely valuable addition to our European team,” said Evertas CEO and Co-Founder J. Gdanski. “His public and private

Owlet utvider globalt fotavtrykk med lanseringen av medisinsk-sertifisert Dream Sock™ i Storbritannia og over hele Europa11.6.2024 11:00:00 CEST | Pressemelding

Owlet, Inc. («Owlet» or the «Company») (NYSE:OWLT), pioneren innen smart spedbarnsovervåking, kunngjør i dag den britiske og europeiske lanseringen av Dream Sock. Dette er en smart babymonitor med levende helseavlesninger og varsler for friske spedbarn mellom 0-18 måneder og 2,5-13,6 kg. Dette innovative medisinske utstyret gir foreldre helse og viktig informasjon i sanntid, noe som gir uovertruffen trygghet. Denne pressemeldingen inneholder multimedia. Se hele pressemeldingen her: https://www.businesswire.com/news/home/20240611820341/no/ (Photo: Business Wire) «Vi er svært stolte over å lansere Dream Sock til omsorgspersoner over hele Storbritannia og Europa og gi millioner av foreldre mer trygghet mens babyen sover,» sa Kurt Workman, Owlets administrerende direktør og medgründer. «Dream Sock er nå et globalt produkt som er anerkjent som medisinsk nøyaktig og trygt, etter å ha gjennomgått regulatoriske autorisasjoner og sertifiseringer innenfor flere geografier. I dag er misjonen vår

V-Nova Surpasses 1000 Patent Milestone in Media Technology Innovation11.6.2024 10:00:00 CEST | Press release

V-Nova, a leading provider of data compression solutions, video compression technology, XR technology, AI acceleration and parallel processing for a multitude of industries including media and entertainment, today announced its milestone achievement of 1000 active technology patents. This accomplishment underscores V-Nova’s dedication to research and development and its commitment to protecting its intellectual property globally. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240611724561/en/ V-Nova’s patent portfolio spans more than 50 different jurisdictions. Including over 400 patents in Europe, over 200 in the Americas, over 100 in the United States specifically, and over 200 in Asia. V-Nova forged new directions in data processing to enhance digital experiences, maximize efficiency, reduce costs, and increase sustainability. The company leads the way with key international data compression standards for the video indust

Alipay+ Reveals Top Scorer Trophy Design for UEFA EURO 2024™11.6.2024 09:24:00 CEST | Press release

Alipay+, a suite of cross-border mobile payment and digitalization technology solutions operated by Ant International and an Official Partner of UEFA EURO 2024™, today revealed the trophy that will be awarded to the most prolific marksman at the UEFA EURO 2024™ finale on July 14 in Berlin, Germany. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240610328619/en/ The UEFA Top Scorer Trophy presented by Alipay+ is unveiled for UEFA EURO 2024™ (Photo: Business Wire) Sculpted in the shape of the Chinese character “支” (pronounced zhi, and meaning payment as well as support), the trophy reflects Alipay+’s dedication to supporting consumers to enjoy seamless payment and a broad choice of deals using their preferred payment methods while traveling abroad. The character also resembles the fleeting moment of a barefooted striker poised to shoot, evoking the original beauty and power of football – a game that united people across the wo

World GlobeA line styled icon from Orion Icon Library.HiddenA line styled icon from Orion Icon Library.Eye