Lenovo Group has announced its results for the second quarter of fiscal 2021/22, which ended September 30, 2021: Revenue reached RMB 115.6 billion, up 23% year-on-year; net profit was RMB 3.3 billion, up 65% year-on-year. Lenovo increased its R&D investment by 57% year-on-year in the second fiscal quarter, successively fulfilling its commitment to double R&D investment within three years.
All three core business units increased their performance. The SSG Solution Services business recorded sales of RMB 8.82 billion, up 30% year-on-year. Operating profit increased 32% year-on-year to RMB 1.8 billion, with an operating margin of 21%; ISG Infrastructure Solutions Group revenue reached RMB 12.7 billion, up 34% year-on-year and close to the break-even point; IDG Smart Devices Business Group revenue reached RMB 99.2 billion, up 21% year-on-year. Operating profit reached RMB 7.54 billion, up 34% year-on-year.
Among business groups, support and software revenue increased 23% y-o-y, while operation and maintenance services increased 88% y-o-y. Truscale’s integrated DaaS business signed 471 new orders. Project and industry solutions revenue increased 21.7% year-over-year.
In the second fiscal quarter, ISG business revenue reached RMB 12.7 billion, up 34% year-on-year and close to breakeven. The China region grew 36% year-on-year. Revenue from cloud services IT infrastructure business grew more than 50% year-on-year to reach a record level, while revenue from enterprise IT infrastructure business grew more than 20% year-on-year. Storage business grew 50% year-over-year globally and 50% year-over-year in China.
Lenovo said ISG will continue to invest in expanding competitiveness and increase investment in high-growth areas such as edge computing, hybrid cloud solutions and 5G cloud network convergence.
In the IDG business, revenue increased 21% year-on-year to RMB99.2 billion. Operating profit improved 34% year-on-year to RMB 7.54 billion. In the PC segment, both the Yoga and Workstation segments doubled year-on-year revenue, while business PC revenue increased 29% year-on-year, and revenue in China also grew 29.2%. Sales in the SMB business increased by 48% year on year.
Non-PC business accounted for 19% of IDG revenue in the second quarter. Smartphone revenue increased 27% year-on-year to a 15-quarter high, and operating profit was RMB578 million. Lenovo’s smartphone business achieved profitable high growth in all regions of the world, with year-on-year revenue growth of 30 percent in Latin America, traditionally the dominant market, with the second-largest market share; 24 percent growth in North America, with the third-largest market share; 24 percent growth in the newly expanded EMEA region and 14 percent growth in the Asia Pacific; and 126 percent growth in China.
At the same time, sales in the tablet business grew 20% year on year, with total tablet sales in China increasing 292.5% and sales in the global accessories business increasing 31%.
In terms of R&D investment, Lenovo Group has invested a total of RMB33.758 billion in R&D over the past three years, with the average annual R&D expenditure exceeding RMB10 billion. In the last fiscal quarter, Lenovo’s R&D investment increased by 40% year-on-year, and in the second fiscal quarter, Lenovo Group’s R&D spending improved by 57% year-on-year.
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