Lenovo warns of delays as profit soars 65pc

Reuters

China's Lenovo Group (0992) reported a 65 percent rise in second-quarter profit yesterday and said it was able to outgrow the market by securing more components despite a global chip shortage, but acknowledged that the shortage was "causing delays in order fulfilment and significant back-log orders across PCs, smartphones, and servers."

Net profit for the quarter ended September 30 jumped to US$512 million (HK$3.99 billion) versus US$310 million (HK$2.41 billion) in the same period a year earlier, and Lenovo said it remained on track towards its goal of doubling profitability in three years.

Revenue rose 23 percent to $17.9 billion, slightly above an average estimate of $17.3 billion from nine analysts, according to Refinitiv data.

In an interview, Yang Yuanqing, CEO and chairman of the group told Reuters that he predicted the shortage would last at least until the first half of 2022.

"The shortage is driven by strong demand, particularly in the IT sector and in the electrical vehicle sector," Yang said.

Shares of the business dropped as much as 5 percent following its results, which Guotai Junan analyst Gin Yu said indicated market fears about how the semiconductor shortage, which has affected everything from automobiles to home appliances, was harming global PC shipments.

Despite concerns over chip supply, Lenovo's stock has climbed more than 70 percent in the previous year.

However, investors were worried last month when the company abruptly withdrawn its 10 billion yuan (HK$12.16 billion) share listing in Shanghai.