Lenovo Group posted a worse-than-expected 24 percent fall in revenue for the April-June quarter, hit by a prolonged slump in global demand for personal computers.
It makes four consecutive quarters that the world’s largest PC maker has suffered a sales decline and comes after Lenovo reported a 14 percent drop in annual profit for the year that ended in March, its first annual decline since 2019.
Revenue in the April-June quarter fell to US$12.9 billion ($20 billion), below a US$13.84 billion average of seven analyst estimates compiled by Refinitiv.
Lenovo shares fell as much as six percent in Hong Kong after the earnings release, compared with a 0.72 percent decline in the benchmark index.
The Covid-19 pandemic gave a huge boost to electronics sales as consumers and companies alike stocked up or upgraded to accommodate a shift to remote work.
However, revenue started contracting last year as demand began to fall, weighed down by rising interest rates and soaring inflation.
The pace of the recovery remains weak and many retailers still have unsold inventory, forcing PC makers and their suppliers including chipmakers to adjust production volume and prices.
“The group’s PC business is stabilizing and well-positioned for a year-on-year recovery in the later part of 2023,” Lenovo said in a statement.
Global PC shipments fell by 12 percent in the second quarter of 2023, according to market research firm Canalys, a big improvement from a more than 30 percent drop in the preceding two quarters.
To improve profit margins, Lenovo has been expanding non-PC businesses such as servers and IT services, but its device business that includes PCs, smartphones and tablets still accounted for nearly four-fifths of group revenue.
Net income attributable to shareholders tumbled 66 percent to US$177 million, versus analysts’ US$212.49 million estimate.