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Lenovo Group: Full Year Financial Results 2021/2022

Lenovo delivers another record year – crossing the US$70 billion revenue milestone and reaching US$2 billion in net income

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Lenovo Group (Image Credit: pressablecdn.com
Lenovo Group (Image Credit: pressablecdn.com)

Lenovo Group 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, 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 successful record year. 

Onboarding opportunities for growth and innovation  

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. It will also continue to realize its ESG goals and commitments.

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.

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Increased margins and profitability

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The trillion-dollar IT services market continues to expand and presents opportunity for growth. 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.

In the last year SSG delivered high profitability and growth, with revenue reaching an all-time high ofUS$5.4 billion, up almost 30% year on year.

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.

Infrastructure Solutions Group (ISG): profitable with record revenue

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.

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.

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All parts of the high-value businesses such as storage, software, services, and HPC set individual revenue records.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.

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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

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.

The 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.

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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.

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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.

Lenovo beyond the numbers:

The company’s philanthropic arm, the Lenovo Foundation, provides smarter technology for all by empowering underrepresented communities with access to technology and STEM education.

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@TechEconomyNG connects past-present-emerging technological impacts on Businesses, People and Cities. All Correspondence to: [email protected]

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