Lenovo Group, the Chinese multinational technology giant, reported a significant 24% drop in revenue in the first quarter of its current financial year, reflecting the ongoing post-Covid slump in global personal computer sales.
This marks the fourth consecutive quarter of declining sales for the world’s largest PC manufacturer.
Lenovo's financial results revealed revenues of US$12.9 billion, falling short of the US$13.84 billion average predicted by seven analyst estimates compiled by Refinitiv.
Gross profit margins of just 17% underscored a high cost of sales relative to revenues.
The company's pre-tax income plummeted by 67%, and basic earnings per share decreased from US$4.39 to US$1.48.
This decline comes on the heels of a 14% drop in annual profit for the year ending in March 2023, marking Lenovo's first annual decline since 2019.
Poor PC sales were partially offset by non-PC businesses, which accounted for 41% of revenues, with the service-led business achieving steady growth and sustained profitability.
On the other hand, Lenovo's infrastructure solutions segment, which offers servers and related equipment, fell 8%. Lenovo's chief executive Yang Yuanqing attributed part of this decline to an ongoing AI chip shortage.
Lenovo's sales in China plummeted more sharply than in other regions, with a 29% quarterly revenue decrease compared to this time last year.
However, the CEO declared optimism about China's long-term economic fundamentals, buoyed by the government's efforts to stabilise the market and boost consumption.
Despite the revenue decline, Lenovo's cash position saw a slight increase, with cash levels rising to US$4.4 billion, up US$567 million year on year.
Lenovo remains the global PC leader, owning 23.2% of the market share.