Lenovo 2012 Annual Report Download - page 18

MANAGEMENT’S DISCUSSION & ANALYSIS
2011/12 Annual Report Lenovo Group Limited
16
During the fiscal year, Lenovo continued to outperform in
the market and further extended its leadership in China
through its solid strategic execution to protect mature
cities; and at the same time, attack emerging smaller cities
and rural areas where demand is stronger due to low PC
penetration. Lenovo’s unit shipments growth in China was
25 percent year-on-year for the fiscal year and market share
increased by 3.2 percentage point year-on-year to an all-
time high of 32.0 percent, according to industry estimates.
Leveraging its position as the country’s PC market leader
with a strong consumer presence, Lenovo continued to
expand its MIDH business in China by rolling out a wide
range of new smartphones and tablets products. Lenovo’s
smartphone market share in China reached 9.5 percent
in the fiscal quarter four and its tablet products had a
dominant position of about 50 percent of the Android
market in China. These new MIDH products achieved
a strong start, laying a solid foundation for the Group’s
initiatives to tap the growth opportunity in China’s mobile
internet arena.
Operating profit in China grew to US$552 million during the
fiscal year, and operating margin was up 0.1 percentage
point year-on-year to 4.5 percent, even as the Group
continued to invest in its mobile internet business during
the year. Operating margin for China PC business was 5.6
percent, up from 4.9 percent in the previous fiscal year.
Emerging Markets (excluding China)
Emerging Markets (excluding China) accounted for 16
percent of the Group’s total revenue.
The Group’s strong growth momentum continued in
Emerging Markets (excluding China) during the fiscal year.
Lenovo successfully expanded its business scale in the
geography through continued improvement in distribution
channels, product portfolio, and investments in branding
and marketing. The Group’s unit shipments grew 38
percent year-on-year for the fiscal year, which was about
4 times the overall market growth of 10 percent. Lenovo’s
market share increased by 1.5 percentage point year-on-
year to record-high of 7.2 percent, according to industry
estimates. Strong unit shipments growth and share gains
were recorded across all key regions. The Group has
achieved milestone achievements in some key markets. In
India, Lenovo has become the number one PC vendor in
the fiscal quarter four with 10th straight quarters of faster
than market growth closing off the fiscal year 11/12 with a
market share of 13 percent. The Group has also become
the number three PC vendor in Russia in the fiscal quarter
four. The Group will continue to attack in markets with less
than 10 percent market share; once 10 percent market
share is hit in the markets, the Group will balance further
share growth with improved profitability; and if the Group
achieves market leadership, Lenovo will seek to maximize
profitability.
Operating loss in Emerging Markets (excluding China)
recorded US$94 million during the fiscal year, against an
operating loss of US$62 million recorded in the previous
fiscal year.
Mature Markets
Mature Markets accounted for 42 percent of the Group’s
total revenue.
The Group continued to record strong performance in
shipments and improved profitability in Mature Markets
during the fiscal year. The Group’s unit shipments in Mature
Market grew 53 percent, against overall market decline of
5 percent. According to preliminary industry estimates, its
market share reached a record high level of 8.7 percent
during the fiscal year, and record-high 10.1 percent market
share in the fiscal quarter four, the first time its mature
market share to reach double-digit level.
EM
Russia
MEA
LAS
India
HTK
EET
Brazil
ASEAN 7.4% (+0.8)
3.7%
6.8%
6.0%
7.4%
4.8%
9.6%
7.2%
13.0%
(+0.6)
(+0.8)
(+1.1)
(+2.2)
(+1.1)
(+1.4)
(+1.5)
(+3.8)
LENOVO SHARE GAINS IN
ALL EMERGING MARKET REGIONS IN FY12