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Lenovo quarterly profit up 133% on China sales

(Agencies)
Updated: 2008-05-23 10:02

Lenovo Group, the world's fourth largest PC maker, said Thursday that earnings for its latest quarter rose 133 percent as strong sales in China and Europe offset slower growth in the United States.

Profit totaled $140 million for the three months ending March 31, the Beijing-based company said. Total revenues rose 13.5 percent to $3.7 billion.

Lenovo said it was the company's eighth straight quarter of profit growth.

"We've made some fantastic progress," chief executive William J. Amelio said at a news conference. He said the company — which includes the former IBM Corp personal computer unit acquired in 2006 — was improving brand awareness, expanding retail sales and cutting costs in production.

Amelio said the company will focus on developing countries.

"You'll see continued growth in the emerging markets. That's essentially targeted for the majority of the growth," he said.

Sales in China, which accounts for about one-third of Lenovo revenues, rose 18 percent to $1.29 billion in the quarter. Sales in Europe, Africa and the Middle East were up 30 percent at $879 million, the company said.

Sales in the United States and the rest of the Americas rose just 9 percent to $1 billion, Lenovo said.

"I'm confident with Lenovo's ability to execute in whatever the economy throws at us, but I am very cautious about what the global economy looks like," Amelio. said. "The fact is, there are definitely gray clouds in the sky."

Non-US markets still look positive and are showing few signs they are affected by fears of an American recession, Amelio said.

"If it's a long, protracted recession, which may be likely, then you'd probably see some effects," he said.

For the full fiscal year ending March 31, earnings rose 201 percent to $484 million, Lenovo said. Full-year sales rose 17 percent year to $16.4 billion.

Lenovo has reported similar improvements in results in previous quarters, with profit growing faster than revenues, which it says is due to cost-cutting. The company said it boosted its gross profit margin last year from 13.5 percent to 15 percent.

Lenovo said last year it had completed integrating the IBM PC unit into its own business. Lenovo had the right to use the IBM name on some products but said earlier it plans to discard it this year.