Lenovo Group has posted a challenging decline of 24 percent in revenue for the April-June quarter, a result of the prolonged global slump in demand for personal computers.
This marks the fourth consecutive quarter in which the world’s largest PC maker has faced declining sales. The downward trend follows Lenovo’s report of a 14 percent decrease in annual profit for the fiscal year ending in March, marking its first annual decline since 2019.
During the April-June quarter, revenue plummeted to $12.9 billion, falling below the average estimate of $13.84 billion from seven analysts compiled by Refinitiv.
In response to the earnings release, Lenovo’s shares dropped by as much as six percent in Hong Kong, in contrast to the benchmark index’s 0.72 percent decline.
While the initial stages of the Covid-19 pandemic had led to a surge in electronics sales due to remote work requirements, revenue has been contracting since last year. This decline is attributed to factors such as rising interest rates and high inflation.
The pace of recovery remains sluggish, with retailers still grappling with unsold inventory. Consequently, PC manufacturers and suppliers, including chipmakers, are adjusting production volume and prices to adapt.
Lenovo stated, “The group’s PC business is stabilizing and well-positioned for a year-on-year recovery in the later part of 2023.”
According to market research firm Canalys, global PC shipments experienced a 12 percent decline in the second quarter of 2023, a significant improvement from the over 30 percent drop observed in the previous two quarters.
In a bid to bolster profit margins, Lenovo has been diversifying its portfolio by expanding non-PC segments like servers and IT services. However, the device business—encompassing PCs, smartphones, and tablets—still contributes to nearly 80 percent of the group’s revenue.
Net income attributable to shareholders took a significant hit, plummeting by 66 percent to $177 million, falling short of analysts’ estimate of $212.49 million.
