Lenovo posts an 11% growth in net profit

China's top computer vendor says that it can overcome the short-term challenges posed by the coronavirus epidemic by leveraging its global footprint. 

Lenovo Group Ltd posted net profit growth of 11 percent in the third fiscal quarter ended on December 31, thanks to booming income of software, service and high-end smart device business, it said on Thursday. 

China’s top computer vendor is facing short-term challenges posed by the coronavirus epidemic due to factory closures but says it will continue growing by leveraging its global footprint.

The quarter’s net profit was US58 million. Revenue saw a slight increase of 0.48 percent to hit US4.1 billion, the 10th consecutive year-on-year quarter of growth. 

“Both group revenue and pre-tax income reached all-time highs,” said Yang Yuanqing, Lenovo’s chairman and CEO. “It enables us not only to seize the opportunities of technology transformation and drive sustainable growth, but also help us address the challenges we face today.”

Lenovo’s software and service income surpassed US billion for the first time, or 7 percent of total revenue, in the quarter, 41 percent growth from a year ago. It also expanded sales of high-end smart computers and devices, which helped it improve profitability, the company said.

Hong Kong-listed Lenovo jumped 7.01 percent to close at HK.80 (83 US cents), compared with a 0.17 percent decrease in the HK market Index on Thursday.

Lenovo “is inevitably facing some short-term constraints and delays as the supply chain is ramped back up after the extended Chinese New Year factory closures.” But it can leverage its geographical balance and supply chains across a global manufacturing footprint to weather the challenges, said Lenovo.

The novel coronavirus outbreak may have a short-term influence of the IT industry. But firms with a global footprint can leverage the advantage and adapt supply chains to deal with it, said Wu Lianfeng, vice president of IDC China.

China will remain the major IT industry base globally with its complete supply chain and huge market size, Wu added.