Lenovo Group Limited · HKEX:992
Lenovo — Q2 2024 Earnings Presentation
28 slides from Lenovo's earnings presentation, Nov 16, 2023
Slide 1: Q2 FY24 Earnings Announcement
Q2 FY24 Earnings Announcement Nov 16, 2023 2023 Lenovo Internal. All rights reserved.
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains “forward-looking statements”, which are statements that refer to the expectations and plans for the future and include, without limitation, statements regarding Lenovo’s future results of operations, financial condition or business prospects as we
Slide 3: Yuanqing Yang, Chairman & CEO
Yuanqing Yang Chairman & CEO Nov 16, 2023 2023 Lenovo Internal. All rights reserved.
Slide 4: Clear signs of recovery, business resilience, exponential growth in A.I.
Smart solutions Clear signs of recovery Business resilience Exponential growth in A.I. 2023 Lenovo Internal. All rights reserved.
Slide 5: Group Performance: Market Recovery & Business Resilience
Group: Performance Market Recovery & Business Resilience • Revenue $14.4B, QTQ improvement for the second time in a row • Gross profit margin 17.5%, a record high for FYQ2 • Non-HKFRS net income $273M, QTQ improvement • Non-PC revenue mix 40%, up 2.9 pts YTY, driven by strong diversified growth engi
Slide 6: Group Opportunities & Sustainable Growth
Group: Opportunities & Sustainable growth Market Recovery & Business Resilience A.I. presents huge opportunities for device, infrastructure & solutions l PC market bottomed, AI PC brings new round of potential growth l Hybrid A.I. creates new demands for computing infrastructure and services Committ
Slide 7: SSG Performance
SSG Performance Solutions & Services Group: Record Revenue & Operating Profit • Revenue & operating profit reached Accumulating A.I. Solutions & Services historic highs again • Protected Support Services & Software as core profit engine • Managed Services, Project & Solution Services revenue mix exp
Slide 8: SSG Opportunities & Sustainable Growth
SSG Opportunities & Sustainable growth Solutions & Services Group: Record Revenue & Operating Profit Strong momentum of horizontal Accumulating A.I. Solutions & Services building blocks: • Digital Workplace Solutions • Hybrid Cloud Solutions • Sustainability Solutions & Services Integrate horizontal
Slide 9: ISG Performance
ISG Performance Infrastructure Solutions Group: Tackling Market Headwinds • External headwinds impacted overall revenue Building Hybrid AI Infrastructure & profitability • Server: revenue & profitability down due to demand shift • Storage: record revenue, +46% YTY, now global No.3 • Software: revenu
Slide 10: ISG Opportunities & Sustainable Growth
ISG Opportunities & Sustainable growth Infrastructure Solutions Group: Tackling Market Headwinds • Hybrid A.I. driving the growth & Building Hybrid AI Infrastructure diversification of ICT infrastructure: l Public cloud / Private cloud / Local datacenters l Cloud/Edge l A.I. Computing / Traditional
Slide 11: IDG Performance
IDG Performance Intelligent Devices Group: Solidifying Market Leadership, • Industry-leading profitability Capturing AI Device Opportunities • PC: Solid global #1 in shipments (market share 23.4%) & activation, #1 in 4 Geos out of 5 • Mobile: shipments grew in double digits YTY (+11%), higher premiu
Slide 12: IDG Opportunities & Sustainable Growth
IDG Opportunities & Sustainable growth Intelligent Devices Group: Solidifying Market Leadership, • Leverage Generative A.I. to Capturing AI Device Opportunities accelerate next-gen A.I. devices • Launch AI PC next year • Invest in innovations • Build long-term competitiveness 2023 Lenovo Internal. A
Slide 13: Capture the huge opportunities of A.I.
Capture the huge opportunities of A.I. Head start Full-stack A.I. portfolio Strongest partnerships in A.I. product roadmap & capabilities in industry 2023 Lenovo Internal. All rights reserved. 13
Slide 14: Wong Wai Ming, Chief Financial Officer
Wong Wai Ming Chief Financial Officer Nov 16, 2023 2023 Lenovo Internal. All rights reserved. *all figures in the following slides are in million US$ unless otherwise stated
Slide 15: Recovery amid New Growth Opportunities
Recovery amid New Growth Opportunities Performance Revenue • Continued investments to accelerate 17,090 Transformation, demand recovery and new 15,267 14,410 12,900 applications including AI. Group revenue 12,635 up 12% QTQ, faster than 10-year average despite still down 16% YTY compared to Q2 22/23
Slide 16: Strong Working Capital Management
Strong Working Capital Management Performance • Cash conversion cycle shortened by 1 day Inventory days (Days) Cash Conversion Cycle YTY to minus 4 days 55 53 - • Days of accounts receivables and inventory -3 -4 -2 53 -6 -4 together improved by 9 days YTY, of which -6 50 47 6 days came from inventor
Slide 17: SSG Performance
SSG Performance Solutions & Services Group Revenue 2,500 • 2Q revenue achieved historical high, up 2,000 1,721 1,836 1,650 1,713 1,918 11% YTY 1,500 1,000 500 • Operating margin of 20% topped all - Q2 22/23 Q3 22/23 Q4 22/23 Q1 23/24 Q2 23/24 business groups and yet below last year’s high mark due t
Slide 18: ISG Performance
ISG Performance Infrastructure Solutions Group Revenue • Demand stabilizing and profitability improving 2,855 2,614 with a 5% QTQ revenue increase, despite 2,200 1,914 2,002 lower YTY revenue and profit due to industry headwinds and AI-centric supply constraints • Storage revenue at all-time high, a
Slide 19: IDG Performance
IDG Performance Intelligent Devices Group1 13,716 Revenue 15,000 • IDG solidified its global PC market 11,586 9,796 10,261 11,515 leadership, ranking #1 in 4 out of 5 geos 10,000 with expanded market share; 2Q revenue 5,000 down 16% YTY but a 12% sequential - Q2 22/23 Q3 22/23 Q4 22/23 Q1 23/24 Q2 2
Slide 20: ESG Updates
ESG Updates 31,532 metric tons Joined UNGC Reduced Carbon Forward Faster Transport of products collected for recycling service to boost customer and reuse in 2022 to accelerate pace and scale needed for Environmental the SDGs1 sustainability2 27% 75% 300,000+ female representation in Beneficiaries
Slide 21: Outlook
Outlook Group Mission is to Lead and Enable Intelligent Transformation Improve net income margin in the medium-term; Turbocharge innovation; Increase brand premium; Drive hybrid AI with pocket to cloud deployment; Leverage Digital Transformation to drive secular growth SSG: Serve as a New Growth Eng
Slide 22: Supplemental Financial Materials
Supplemental Financial Materials - Financial Summary - Condensed Consolidated Income Statement - Condensed Consolidated Balance Sheet - Condensed Consolidated Cash Flow Statement - Supplemental Non-HKFRS Measures 2023 Lenovo Internal. All rights reserved. 22
Slide 23: Financial Summary
Financial Summary US$ Million Q2 22/23 Q2 23/24 Y/Y% Revenue 17,090 14,410 -16% Gross profit 2,877 2,522 -12% Operating expenses (2,026) (2,008) -1% Operating profit 851 514 -40% Operating profit (non-HKFRS) 907 512 -44% Other non-operating expenses (141) (156) 11% Profit before taxation 710 358 -50
Slide 24: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement US$ Million Q2 22/23 Q2 23/24 Revenue 17,090 14,410 Cost of sales (14,213) (11,888) Gross profit 2,877 2,522 Selling and distribution expenses (886) (792) Administrative expenses (546) (638) Research and development expenses (556) (498) Other operating income/
Slide 25: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet US$ Million As of Sept 30, 2022 As of Sept 30, 2023 Current assets 28,118 23,409 Bank deposits and cash 5,628 3,799 Trade, notes and other receivables 13,445 12,935 Inventories 8,418 6,170 Others 627 505 Non-current assets 15,175 15,848 Property, plant and equipm
Slide 26: Condensed Consolidated Cash Flow Statement
Condensed Consolidated Cash Flow Statement US$ Million Q2 22/23 Q2 23/24 Net cash generated from operating activities 2,084 454 Net cash used in investing activities (806) (469) Net cash generated from/(used in) financing activities 625 (575) Increase/(decrease) in cash and cash equivalents 1,903 (5
Slide 27: Supplemental Non-HKFRS Measures
Supplemental Non-HKFRS Measures US$ Million Q2 22/23 Q2 23/24 Profit before Profit for the Profit Profit before Profit for the Profit Operating profit taxation period attributable to Operating profit taxation period attributable to equity holders equity holders As reported 851 710 554 541 514 358 28
Slide 28: Smarter technology thanks. Lenovo
Smarter technology thanks. Lenovo