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Chinese computer maker Lenovo reports record-high growth despite a year of controversies at home

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The Beijing-based company's annual revenue jumped 18 per cent to US$71.6 billion, while profit was up 72 per cent to US$2.0 billion year-on-year, a record high for both since the company went public in 1994.

Sales of PCs, smartphones and other devices, the company's core products, rose 18 per cent to US$62.3 billion, contributing nearly 90 per cent of the company's annual revenue. The growth was mainly driven by the rush to purchase PCs to work from home last year, the company said.

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Separately, US computer maker Dell Technologies beat Wall Street estimates for quarterly profits and revenue on Thursday, as enterprises invested heavily in the company's desktops and laptops to support hybrid work arrangements. Dell said revenues for its client solutions group, or hardware unit, rose 17 per cent in the quarter ended April 29.

Lenovo has maintained its lead in the global PC market with a 23.1 per cent market share in the January to March period, thanks to its in-house manufacturing and operations control, Counterpoint analyst William Li wrote in a recent research note.

Sales for Lenovo's solutions and services business units, which include all of its IT solutions across different devices, surged 40 per cent during the year. Its infrastructure solutions business, which includes cloud computing, also turned profitable for the first time due to strong demand brought about by digital transformation in the global market, the company said.

Lenovo's strong performance comes in a year that saw the company caught up in multiple controversies. Late last year, the US and Hong Kong-listed company scrapped plans for a domestic listing on Shanghai's Star Market - China's answer to the Nasdaq - which reduced its chances of paying off hefty debts, making its financial situation look grim.

This photo taken on August 13, 2021 shows a staff member spraying disinfectant as a preventive measure against Covid-19 in the dining hall of a Lenovo factory in Wuhan, China's central Hubei province. Photo: STR/AFP alt=This photo taken on August 13, 2021 shows a staff member spraying disinfectant as a preventive measure against Covid-19 in the dining hall of a Lenovo factory in Wuhan, China's central Hubei province. Photo: STR/AFP>

At the same time, nationalist netizens accused Lenovo of paying hefty salaries to its retired founder Liu Chuanzhi and other executives.

Looking ahead, the company said this week it might see performance impacted in the short term due to a severe supply chain problem complicated by continuous chip shortage and disrupted production under China's strict Covid-19 control measures.

"The macro headwind is weighing on the performance heavily in the short term," Lenovo executive vice-president Luca Rossi said on the earnings call, adding that manufacturing disruptions are likely to impact shipments in the current quarter.

Additional reporting by Reuters

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

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