On the afternoon of 24 may, CEO Yang Yuanqing, the Lenovo group, issued an internal letter to its employees saying that the results confirmed the sharing of
In the fourth quarter, Lenovo's turnover was $10 billion 600 million, an increase of 11% over the past year and a return to double-digit growth. Lenovo's three major businesses all improved their profitability and promoted the overall profitability of the company, which did not include a one-off non - operating revenue and expenditure of $255 million in the year of pre tax operating performance.
At the end of the letter, Yang Yuanqing specifically stated that
The following is the full text of Yang Yuanqing's letter
Lenovo's fourth quarter boom broke back to two digit growth, and three main businesses improved overall profitability.
Today we released the fourth quarter of fiscal year 2017/18 and the annual financial results. Our achievements confirm my sharing with you at the oath conference.
Although we were faced with many challenges at the beginning of the fiscal year, with the powerful implementation of the three wave strategy, we have crossed the inflection point and entered the ascending channel again.
In the fourth quarter, our turnover was US $10 billion 600 million, an increase of 11% over the past year and double digit growth. Our three major businesses all improved their profitability and promoted the overall profitability of the company, which did not include a one-off non operating revenue and expenditure before tax operation performance year by 255 million US dollars.
In the whole fiscal year, our turnover reached US $45 billion 400 million, an increase of 5.4% over the previous year. After 2 years, we returned to the growth channel. It can be said that we are moving forward not only in a firm way but also in a new height.
Let us look at every wave in the three wave strategy:
The first wave of personal computers and tablet computers
In the fourth quarter, our personal computer and tablet business turnover increased by 16% over the past year, reaching the fastest growth rate in 4 years. Moreover, the profit margin before tax returns to 5% after a year.
In the whole fiscal year, personal computers and tablet computers have returned to healthy growth, with annual turnover and sales increasing by more than that of big cities. Despite the serious price rise of components last year, we still maintained a leading level of profitability. In the global enterprise market, both the turnover and sales volume have taken the first place in the world. The turnover of workstations and game computers also exceeded $1 billion.
Second wave data center business and mobile service
Data center business:
Our data center business has shown a stronger growth momentum in the four quarter, with an annual growth of 44%, all of which have increased in all large areas and all product categories. Our profit level has improved by 11 percentage points over the same period last year, narrowing its losses for fourth consecutive quarters. Our turnover in North America is nearly doubled, and we have achieved more than 60% growth in Europe, Middle East Africa and Latin America. In China, while improving our turnover, we have effectively improved profitability.
In the whole fiscal year, the effect of our continuous transformation is showing, the turnover is growing year by year, the profit level has improved by 2 percentage points, and the loss is narrowed by season. In the field of large scale data centers, we build a customer oriented business model, improve self-study and customization. The turnover has increased by more than 50% year in year, and the gross interest rate has increased by more than 10 percentage points. The turnover of software defined business increased by three digits.
In terms of mobile services, our overall performance is not as good as expected. We are still optimizing the brand strategy and business models of emerging markets, but our performance in Latin America and North America is still strong. Moreover, we have taken action to substantially optimize the cost structure and reduce the cost by 30%, making preparations for the new financial year's business return to health track.
In the last fiscal year, despite the challenges faced by mobile businesses, we maintained strong performance in Latin America and North America. Compared to the previous year, our sales in Latin America grew by more than 40%, 20 times the average market growth and nearly 60% in North America. In the second half of last year, our profit level has begun to improve.
The third wave of new smart devices,
We have made solid progress in the third wave of business. Fourth quarter, our software and services and other non equipment business turnover increased by nearly 30% over the past year. In the new type of equipment, our Mirage has become the global AR helmet sales champion, last quarter, we also launched the Mirage Solo VR head display, Mirage camera, and the ThinkSmart Hub intelligent conference system and other rich new products.
Although for Lenovo such a large company, transformation is particularly difficult, but we prove again with actions and results, God rewards diligent! Compared to a year ago, our competitiveness base was strengthened, especially in the last 6 months. I believe that the new good days are coming!
Looking forward to the new year of Finance:
Our smart devices business group (IDG) will further strengthen the leading profitability and market position of the PC and tablet industry, continue to reduce losses in the field of mobile services, promote business back on track and healthy development, and will focus on the intelligent Internet of things equipment and the construction of the UDS platform (connecting users, equipment and equipment. Service platform), enhance service permeability.
Our data center business will target sustainable profitability, with the industry's leading continuous innovation, doubling the turnover of large scale data center business and software - defined business. Of course, we will also vigorously promote a significant improvement in profitability.
In the third wave, we will continue to invest in IoT Internet of things, big data and artificial intelligence technology, and establish the competitiveness of vertical industry intelligent solutions.
Let us give full play to the advantages, maintain the momentum, rely on the best customers to experience the best products and unite the outstanding talents, grasp the new opportunities brought by the intelligent Internet of things, large data and artificial intelligence. Let us continue to promote strategic implementation, closer to customer needs, and create new competitive advantages for the intelligent Internet of things and intelligent era.
Finally, especially to all the staff on the Chinese platform, we have recently been attacked by the Internet rumor. As the truth becomes more and more clear, we will focus on business, serve our customers well, not only give the most powerful retaliation to the rumor, but also help the great rejuvenation of the country with the flourishing performance.
Thank you all.
Chairman of Lenovo Group and CEO Yang Yuanqing
May 24, 2018