Lenovo A/NZ sees profit growth following tax benefit

Lenovo A/NZ sees profit growth following tax benefit

Services revenue plummets as PC sales continue to decline

Lenovo Australia and New Zealand has gained a major uplift of net profit after tax (NPAT) due to a $7.3 million tax benefit which pushed its bottom line up to $12.5 million for the financial year ended March 2018.

The year previously, Lenovo saw most of its $5.7 million profit eaten away by tax, leaving it with $700,000.

However, sales of goods and services by Lenovo have dipped across A/NZ as the global PC market continues to decline. In particular, the Chinese vendor’s support services revenue took a major hit, plummeting by more than a quarter, going from $31.3 million in 2017 down to $23 million for the year ending 31 March 2018.

The yearly update revealed a 2.6 per cent decline in income from PC sales totalling $683 million for the trans-Trasman region. Meanwhile operating revenue from other activities increased from $5.4 million to $12 million.

The global PC market has performed poorly in recent years, marking seven years of consecutive decline last year, according to Gartner.

However, partly thanks to Federal Government tax cuts, the Australian market had so far managed to buck the downward trend, only seeing decline in the fourth quarter of last year.

Lenovo has often proved a tough competitor to market leader HP, performing the second strongest in the Australian market this time last year. However, IDC’s recent fourth quarter roundup showed the Chinese giant has since lost ground to Dell and Apple respectively.

Lenovo's 2018 results do not include enterprise sales of servers, storage and data centre solutions following the company’s decision to split its data centre operations off into a new legal entity.

Coming as part of an effort to pitch itself against data centre vendor leaders like Dell Technologies and HP, the company officially launched Lenovo Global Technology (Australia and NZ) on January 2017.

Branded as its Data Centre Group (DCG), Lenovo revealed a renewed focus on supercomputing, software-defined networking and hyper-converged computing. Since its launch, it has on-boarded more than 800 new customers into the new business.

Lenovo had not responded to ARN's request for comment at the time of writing.

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Tags AustraliaPCsNew ZealandLenovoPC support


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