Personal computer (PC) maker Lenovo Group swung to its biggest annual loss in nine years as higher component costs, an expected tax write-down and lower income from asset disposals overshadowed growth in revenue.
The company, which lost the position of world's largest PC maker to HP Inc in 2017, has seen its core PC business suffer from a shrinking market globally, while its smartphone business struggles to stay ahead of fierce competition.
Lenovo Chairman and CEO Yang Yuanqing said in an internal letter to staff that the company has opened "a new chapter."?
"We have been the target of internet rumors recently. As the truth becomes clearer and explanations emerge, let us focus on our business and serve our customers well… to combat these rumors and help the nation's rejuvenation," Yang said, according to media report.
For the year ended March 2018, Lenovo's revenue rose 5 percent to a three-year high, but it still posted a loss of $189 million compared with a year-earlier profit of $535 million.
This was the company's biggest loss since 2009 and wider than an average analyst estimate for a loss of $161.3 million from 17 analysts polled by Thomson Reuters.
Year-on-year comparisons were skewed by income of $10.89 million from asset disposals in 2017, versus only $300,000 in the year just ended.
Lenovo's annual results were also hit by a $400 million write-down in deferred income tax assets to reflect a lower US corporate tax rate.
Net profit for the fourth fiscal quarter plunged 69 percent to $33 million, partly reflecting increased component prices and continued losses in the company's non-core smartphone and data center businesses. The profit, however, beat a consensus estimate of $27.7 million.
Revenue for the period rose 11 percent to $10.6 billion, pushing full-year revenue to $45.35 billion.
The company's PC and smart devices business posted a 2 percent drop in profit for the year despite an 8 percent growth in revenue.
Revenue in the mobile business fell 6 percent. Lenovo said the segment will "focus on reducing losses in new fiscal year" by focusing on profitable markets such as the Americas.
