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 development in seven quarters.

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

“As a result of macro financial headwinds, the scarcity is weighing considerably within the very brief time period,” Luca Rossi, government vp of Lenovo, advised a post-earnings name.

“Particularly on this quarter, the manufacturing shutdowns will impression the full shipments in mainly in all places, notably within the Folks’s Republic of China,” he mentioned, including that demand was additionally being curbed by geopolitical tensions and inflationary stress.

Lenovo’s CFO Wai Ming Wong mentioned the corporate’s Shenzhen manufacturing unit operations have been impacted in the course of 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 corporate mentioned it was seeing some easing in provide shortages for the PC phase, however mentioned its smartphone and information heart companies have been nonetheless underneath heavy stress.

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 keeping with information from analysis agency Counterpoint.

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

The corporate’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 yr earlier, under a mean estimate of $17.36 billion (roughly Rs. 1 ,34,799 crore) from 9 analysts, in keeping with Refinitiv. That amounted a 6.8 p.c year-on-year rise, its slowest development in seven quarters.

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

Lenovo additionally reported the annual end result for its fiscal yr ending in March. Income 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 very best ranges for each for the reason that firm went public in 1994.

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

© Thomson Reuters 2022

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