LENOVO REPORTS THIRD QUARTER 2007/08 RESULTS

LENOVO REPORTS THIRD QUARTER 2007/08 RESULTS
• Quarterly sales jumps 15% to US$4.6 billion
• Quarterly EBITDA (excluding restructuring) of US$244 million, up 91%
• Quarterly pre-tax income (excluding restructuring) surges 190% to US$192 million
• Quarterly profit attributable to shareholders (including restructuring) of US$172 million, up 198%
• Quarterly basic EPS (including restructuring) of 1.93 US cents, or 15.01 HK cents, up 188%
• Net cash reserves of US$2.0 billion (as of December 31, 2007)
HONG KONG, January 31, 2008 – Lenovo Group today reported strong financial results for its third fiscal quarter of 2007/08, which ended December 31, 2007. Sales for the quarter jumped 15%, year over year, to US$4.6 billion, driven by double-digit growth in Lenovo PC unit shipments and sales across all of the Company’s operating geographies. For the seventh consecutive quarter, Lenovo worldwide PC shipments exceeded the average growth rate of the global PC market, with year-over-year growth of 22%, healthily outpacing the industry average growth of 16%.
Lenovo’s segment operating profit margin for the third quarter of 2007/08 was 4.4%, compared to 2.4% in the same period a year ago, and up 0.4 percentage points sequentially, evidence of the Company’s operating efficiency efforts. For the third quarter of 2007/08, Lenovo reported pre-tax income of US$192 million (excluding restructuring) and basic earnings per share of 1.93 US cents, or 15.01 HK cents. Net cash reserves as of December 31, 2007, totaled US$2.0 billion.
“Our outstanding third quarter results demonstrate again Lenovo’s acquisition and integration strategies are correct, with good execution,” said Lenovo Chairman Yang Yuanqing. “Lenovo’s ability to achieve faster-than-market growth and profitability was a direct result of the improvements to our competitiveness. In the next phase, we will maintain our momentum in the relationship business and in the Greater China region, while pushing forward with our transaction and consumer business globally, to continue on the path of profitable growth.”
William J. Amelio, Lenovo’s president and CEO, said, “The quarter illustrates not only our ability to deliver consistent, predictable performance, but also the PC market’s resiliency. The global PC market is expected to grow in the double digits in 2008, given strong outlooks in Asia and emerging markets. We also expect to see an impact from the recent extension of our product offerings to include higher-margin products, such as workstations and servers, to further balance our product portfolio. Despite increasing economic uncertainties, we remain confident in our ability to continue to deliver profitable growth that outpaces our industry.” Amelio also cited Lenovo’s diverse sales distribution, where a full 75% of the Company’s sales are generated outside the Americas.
“We enter 2008 with continuing market momentum and significant progress against our strategic priorities,” said Amelio. “This will be a key year for Lenovo, as 2008 will mark our first year without IBM branding on our products. We believe 2008 will be a breakout year for the Lenovo brand on the world stage, with the implementation of our new global consumer branding campaign centered around “Ideas” and sponsorship of the Beijing Summer Olympic Games.”

>>