Lenovo 2013 Annual Report Download - page 20

Lenovo Group Limited 2012/13 Annual Report
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MANAGEMENT’S DISCUSSION & ANALYSIS
time high of 34.6 percent, according to industry estimates.
Leveraging its position as the country’s PC market leader
with a strong consumer presence, the Group’s MIDH
business in China posted strong unit shipments growth.
The Group’s smartphone unit shipments grew more than
3 times year-on-year. As a result, the Group continued to
record strong revenue growth in China, up 17 percent,
supported by the stellar MIDH performance of revenue
growth at 108 percent year-on-year.
Operating profit in China grew to US$678 million during the
fiscal year, and operating margin was up 0.1 percentage
point year-on-year to 4.7 percent, even as the Group
continued to invest in its mobile internet business during
the year. Operating margin for China PC business was 6.2
percent, up from 5.8 percent in the previous fiscal year.
Asia Pacific/Latin America (APLA)
APLA accounted for 20 percent of the Group’s total
revenue. Lenovo’s unit shipments in APLA grew 13 percent
year-on-year against a 8 percent decline for the overall
market, according to preliminary industry estimates. Lenovo
continued to solidify its number one position in Japan. CCE
acquisition completed in January 2013 and it started to
contribute in the fourth quarter of FY12/13. The integration
of CCE is on track and it is expected to help accelerate the
Group’s expansion in the Brazil market. As a result, Lenovo
achieved a market share in APLA of 11.4 percent, up 2.1
percentage point from previous fiscal year.
Operating profit in APLA regions further improved to US$24
million during the year under review and operating margin
was 0.3 percent, an increase of 0.3 percentage point year-
on-year.
Europe-Middle East-Africa (EMEA)
EMEA accounted for 22 percent of the Group’s total
revenue. Lenovo’s unit shipments in EMEA grew by 28
percent year-on-year, which was a 37-point premium to the
market. The strong shipment growth was attributable to the
Group’s strategy in driving its SMB and consumer business.
Thus the Group’s market share increased by 3.1 percentage
point from a year ago to 10.7 percent for the year under
review, according to preliminary industry estimates. Strong
unit shipments growth and share gains were recorded
across all key regions year-on-year in the year under review.
Lenovo became the number three PC company in EMEA
regions and became number one PC player in Germany
and Denmark and number two PC player in Russia in the
fiscal year under review. Lenovo successfully expanded
its business scale in the geography through continued
improvement in distribution channels, product portfolio, and
investments in branding and marketing.
Operating profit in EMEA regions further improved to
US$147 million during the year under review and operating
margin was 2.0 percent, an increase of 0.7 percentage
point year-on-year.
North America (NA)
North America accounted for 15 percent of the Group’s
total revenue. Lenovo’s unit shipments in North America
grew by 9 percent year-on-year, which was about a
20-point premium to the market driven by the strong
growth in consumer and SMB business through successful
execution of its channel strategy, as well as its leadership
in commercial segment. Thus the Group’s market share
increased by 1.6 percentage point from a year ago to a
record-high 8.8 percent, according to preliminary industry
estimates. Lenovo has become the number four PC
company in North America and the U.S. markets in the year
under review.
Operating profit in NA markets was US$168 million during
the fiscal year, against US$161 million recorded in the
previous fiscal year. NA markets’ operating margin was 3.4
percent for the fiscal year, a decrease of 0.1 percentage
point year-on-year. The decrease was mainly attributable
to an increased mix of consumer business during the year
under review.
PERFORMANCE OF PRODUCT GROUPS
During the fiscal year 2012/13, Lenovo achieved strong
and balanced unit shipments growth in both commercial
and consumer PC products, as well as in both desktop
and notebook PC products. The MIDH Group also shows
strong growth during the year under review.
Lenovo is committed to and investing in innovation that
differentiates its products. At the International Consumer
Electronics Show (CES) in Las Vegas in January 2013,
Lenovo won record 53 major awards, demonstrating the
industry’s recognition of the outstanding quality, design and
functionality of the Group’s products.