Lenovo revenue down $10bn in fiscal 2023 results
The group’s revenue fell from $71bn in 2022 to $61bn this year amid a continued declining PC market
Lenovo's revenues suffered a heavy hit in its 2023 full-year earnings as a result of the PC market slump, with Q4 figures sinking to mark its third consecutive quarterly fall.
The group's overall revenue came to $62bn, down 14 per cent from $71bn in 2022.
While net income came in at $1.6bn, down from $2bn representing a drop of 21 per cent.
The Chinese tech giant said its intelligent devices group (IDG) business saw a 21 per cent setback in revenue due to sector inventory digestion, demand slowdown and exchange rate fluctuations.
IDG revenue dropped from $62bn to $49bn in 2023.
Lenovo said profitability was stable with gross margin and operating margin both delivering "18-year highs".
Revenue from non-PC businesses reached a fiscal year high of nearly 40 per cent, fuelled by Lenovo's diversified growth engines of solutions and services group (SSG) and infrastructure solutions group (ISG) growing revenue to $6.7bn and $9.8bn respectively, up 22 per cent and 37 per cent year-on-year.
After a year of industry and global uncertainties, Lenovo claims it's seeing positive signs of the market stabilising.
The vendor expects the entire PC and smart devices market to resume year-to-year growth in the second half of 2023, and for the IT services market to resume relatively high growth - together Lenovo claims these will drive the total IT market in 2023 back to moderate growth.
Lenovo said its cash position "remained strong", and its cash conversion cycle has "further improved".
The company continued to invest in R&D around ‘New IT' (client, edge, cloud, network, and intelligence) to build its future core competencies.
During the last year, in fact, Lenovo increased its full year investment in R&D to $2.2bn, up six per cent year-to-year.
In Q4, Lenovo recognised a one-time restructuring and other charges of $249m, among various other actions, to deliver around $850m of annual run-rate group expense savings, helping to establish a solid foundation for the company's operations in a challenging market, and position it for future growth.
However, Lenovo closed the quarter with revenue of $12.6bn, down 24 per cent year-to-year.
Revenue from IDG declined 33 per cent year-to-year, with momentum from the growth engines of SSG and ISG somewhat offsetting the device market softness.
SSG revenue was up 18 per cent YTY to $1.6bn, and ISG revenue was up 56 per cent to $2.2bn. Non-PC revenue mix during the quarter reached what Lenovo calls a "historic high" of 43 per cent, up 12 points year-to-year.
"Lenovo has delivered stable profitability in the last fiscal year as our diversified growth engines continue to hit new milestones," said Lenovo chairman and CEO Yuanqing Yang.
"Their momentum is driving steady progress in our services-led transformation, and our non-PC businesses' revenue mix increased to nearly 40 per cent.
"Our clear strategy is working, and our operation is resilient, even in the face of global uncertainties.
"Going forward, we will continue to invest in R&D to capture the next wave of growth opportunities, so we are well prepared for the future."