Lenovo Group back in profit thanks to China computer sales

Lenovo Group, the world's fourth-largest personal computer maker, rebounded to a profit for the second quarter, driven by strong sales in China and other emerging markets.

Profit was $55 million (£35.5 million), or 54 cents per share, for the three months to June 30 compared with a $16 million loss last year, the company said today.

Global sales surged 50% from a year ago to $5.1 billion (£3.29 billion), boosted by a 50% rise in China. The company said sales in other emerging markets doubled, while its global market share rose to double digits for the first time, reaching 10.2%.

"We achieved great results across the world last quarter, with all of our regions outgrowing the market," said chief executive Yang Yuanqing.

Lenovo was hit hard by the global economic crisis, which prompted its core corporate customers to slash purchases. The company suffered three losing quarters before rebounding to profit in the three months ending last September.

But Yang said today that global demand was recovering, though mature markets have yet to emerge fully from the crisis. "Emerging markets still offer growth opportunities we can leverage," he added.

Chairman Liu Chuangzhi said the company will spend more on research and development to maintain its profit margins as PCs become a commodity.

"In the next few years, Lenovo will work on maintaining sustainable and stable fast growth, rather than just generating extremely high profits in the short term," Liu said.

Lenovo acquired IBM's PC unit in 2005 and expanded into wireless computing this year, launching its Lephone smartphone and two web-linked portable computers in January.

Yang said 100,000 Lephones had been sold in the quarter, though a lack of panels held down sales volume. He said the company is dealing with the shortage and should be able to sell one million units within the phone's first year.

"The mobile internet is growing, and it will create new categories and business models," Yang said.

In China, overall sales rose to $2.5 billion (£1.6 billion), accounting for 48.7% of worldwide sales. Sales rose to $821 million (£529 million), or 16% of the total, in other emerging markets including eastern Europe, India, Latin America, Pakistan and Turkey.

Sales in the US, Europe and other mature markets grew less strongly but still rose 38.5% over a year earlier to $1.8 billion (£1.16 billion).