Lenovo China Warns About Shipment Shortage Due to Supply Chain Issues Amid Slow Revenue Growth

China’s Lenovo Group warned on Thursday that shipments would fall within the brief time period as China’s COVID-19 lockdowns exacerbated shortages of microchips, after posting its slowest quarterly progress in seven quarters.

The world’s largest maker of non-public computer systems (PC) is amongst many firms going through provide chain complications which have been worsened by a protracted scarcity of chips, enterprise disruptions from the Russia-Ukraine warfare and China’s efforts to cease the unfold of COVID within the nation.

“Due to the macro financial headwinds, the scarcity is weighing considerably within the very brief time period,” Luca Rossi, govt vp of Lenovo, informed a post-earnings name.

“Specifically on this quarter, the manufacturing shutdowns will affect the whole shipments in mainly in every single place, notably within the People’s Republic of China,” he stated, including that demand was additionally being curbed by geopolitical tensions and inflationary strain.

Lenovo’s CFO Wai Ming Wong stated the corporate’s Shenzhen manufacturing unit operations have been impacted through the quarter. The south China metropolis imposed a one-week lockdown in March and performed a number of rounds of testing after a bounce in COVID circumstances.

The firm stated it was seeing some easing in provide shortages for the PC section, however stated its smartphone and information centre companies have been nonetheless beneath heavy strain.

A bellwether for the worldwide PC market, the Beijing-based firm led the market with a 23.1 p.c share within the January-March interval, in accordance to information from analysis agency Counterpoint.

A rush to purchase PCs to work from home through the pandemic culminated in report gross sales and revenue for Lenovo within the December quarter. But gross sales have begun to lose steam as China, the corporate’s greatest market, has been hit by the Omicron variant, preserving shoppers at residence and shutting factories.

The firm’s income rose to $16.69 billion (roughly Rs. 1,29,559 crore) within the quarter ended March 31 from $15.63 billion (roughly Rs. 1,21,331 crore) a 12 months earlier, beneath a mean estimate of $17.36 billion (roughly Rs. 1,34,799 crore) from 9 analysts, in accordance to Refinitiv. That amounted a 6.8 p.c year-on-year rise, its slowest progress in seven quarters.

However, revenue attributable to shareholders jumped to $412 million (roughly Rs. 3,199 crore), exceeding analysts’ expectations.

Lenovo additionally reported the annual consequence for its fiscal 12 months ending in March. Revenue rose 18 p.c to $71.6 billion (roughly Rs. 5,55,970 crore) and revenue jumped 72 p.c to $2 billion (roughly Rs. 15,530 crore), the best ranges for each because the firm went public in 1994.

Counterpoint reported in April that international PC shipments fell 4.3 p.c within the first quarter of 2022, because the warfare in Ukraine and China’s lockdowns pressured already fragile provide chains and added to shortages of parts.

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