China's Lenovo beats chip shortage to post 65% rise in Q2 profit

Lenovo reported a 65% rise in second-quarter profits amid a global chip shortage.

SHANGAI:

China's Lenovo Group (0992.HK), the world's biggest maker of personal computers, reported a 65% rise in second-quarter profit on Thursday and said it was able to outgrow the market by securing more components amid a global chip shortage.

Profit for the quarter ended Sept. 30 attributable to equity holders jumped to $512 million versus $310 million in the same period a year earlier, and Lenovo said it remained on track towards its goal of doubling profitability in three years.

Revenue rose 23% to $17.9 billion, slightly above an average estimate of $17.3 billion from 9 analysts, according to Refinitiv data.

"The industry-wide component shortage of various integrated circuits (ICs) remained a business challenge, causing delays in order fulfilment and significant back-log orders across PCs, smartphones, and servers," it said in a statement.

"The group was able to excel in operational efficiency by securing more supply of components than peers to outgrow the market."

It also said that it saw strong sales growth in China and America, but a decline elsewhere in the Asia Pacific due to fewer educational deals in Japan.

Growth in worldwide PC shipments slowed in the September quarter as easing anti-virus measures and the rising availability of COVID-19 vaccines shifted consumer and educational spending away from PCs to other priorities, according to research consultancy Gartner said.

Lenovo retained the title of largest worldwide PC vendor by shipments, though its growth slowed after five consecutive quarters of double digit growth, Gartner said. In the third quarter, Lenovo's global market share grew 1.8% to 23.7%.

Shares in Lenovo tumbled last month after it abruptly withdrew its application for a 10 billion yuan ($1.55 billion) share listing in Shanghai, days after it had been accepted by Shanghai's STAR Market. 

But its Hong Kong shares are still up more than 70% over the past year, boosted by strong demand for electronics as more people work from home.