Lenovo flags challenging outlook amid quarterly loss
- 01 February, 2018 13:59
Chinese PC maker, Lenovo, swung to a loss in the third quarter from a profit last year, hurt mainly by a one-off charge of US$400 million resulting from recent US tax reforms, and said the short-term outlook was challenging.
However, the company expressed confidence it could drive growth and that US corporate tax cuts would "positively impact" future earnings of its operations in the country.
Tax reforms signed into law in December lower the income tax rate for US firms to 21 per cent from 35 per cent.
Lenovo, a unit of Legend Holdings, reported a loss of US$289 million for the three months to December, versus a US$98 million profit a year ago. It had in January said it expected to incur a one-off charge for the nine months ended in December due to a reassessment of US deferred tax assets.
The company's revenue for the quarter was US$12.94 billion, up slightly from US$12.17 billion a year ago.
Lenovo said its core PC and smart devices business group posted an 8 per cent rise in revenue to US$9.25 billion as sales exceeded shipments growth, on better average selling prices driven by innovative products and a better product mix.
Its struggling mobile business reported a narrower operating loss before taxation of US$92 million, versus a loss of US$132 million in the second quarter.
"The group now has a stronger organization with sharper customer focus and more compelling product portfolio across all its businesses," Lenovo said in a statement to the Hong Kong stock exchange on Thursday.
"Coupled with strong execution, the group remains confident it can build leading positions in every business the group enters and drive profitable growth."
(Reporting by Sijia Jiang and Donny Kwok; Editing by Himani Sarkar)