LENOVO GROUP-联想集团(00992) - 2023 - 年度财报

Financial Performance - Lenovo's revenue for the fiscal year ending March 31, 2023, was $61.947 billion, a 14% decrease year-over-year[6] - Gross profit for the fiscal year was$ 10.501 billion, with a gross margin of 17.0%, a 0.2 percentage point increase compared to the previous year[6] - Operating expenses decreased by 13% to $7.832 billion, with the operating expense ratio increasing slightly by 0.1 percentage points to 12.6%[6] - Pre-tax profit was$ 2.136 billion, a 23% decrease year-over-year, with a pre-tax profit margin of 3.4%, down 0.5 percentage points[6] - Net profit attributable to equity holders was $1.608 billion, a 21% decrease compared to the previous year[6] - Earnings per share (basic) were$ 0.1350, a decrease of $0.0395 compared to the previous year[6] - Cash and cash equivalents increased by 7% to$ 4.321 billion, while net cash decreased by $236 million to$ 366 million[6] - Total revenue for the fiscal year ending March 31, 2023, was $61.95 billion, a decrease from$ 71.62 billion in the previous year[71] - Gross profit margin increased to 17.0% from 16.8% year-over-year[71] - Net profit attributable to equity holders decreased to $1.61 billion from$ 2.03 billion in the previous year[71] - Operating expenses decreased by 13% year-over-year, with employee benefits costs reduced by $613 million[73] - Strategic investment fair value gains increased to$ 203 million from $135 million in the previous year[73] - Financial expenses increased by 81% due to higher market interest rates and the issuance of notes and convertible bonds[75] - The company recorded$ 209 million in severance and related costs as part of resource allocation measures to improve efficiency[73] - Advertising and promotional expenses decreased by $285 million as part of cost optimization efforts[73] - R&D expenses increased to$ 2.20 billion from $2.07 billion in the previous year[73] - The company's net exchange loss decreased by$ 39 million due to currency fluctuations[73] - Intelligent Devices Group revenue decreased to $49.37 billion in 2023 from$ 62.31 billion in 2022, a decline of 20.8%[76] - Infrastructure Solutions Group revenue increased to $9.76 billion in 2023 from$ 7.14 billion in 2022, a growth of 36.6%[76] - Solutions and Services Group revenue rose to $6.66 billion in 2023 from$ 5.44 billion in 2022, an increase of 22.5%[76] - Total revenue for the company decreased to $65.79 billion in 2023 from$ 74.89 billion in 2022, a decline of 12.1%[76] - Operating profit for the company decreased to $5.09 billion in 2023 from$ 5.94 billion in 2022, a decline of 14.3%[76] - Headquarters and corporate expenses decreased to $1.09 billion in 2023 from$ 1.51 billion in 2022, a decline of 27.8%[76] - Non-Hong Kong Financial Reporting Standards adjusted profit before tax was $2.94 billion in 2023, compared to$ 3.20 billion in 2022[79] - Non-Hong Kong Financial Reporting Standards adjusted net profit attributable to equity holders was $1.88 billion in 2023, compared to$ 2.16 billion in 2022[79] - The company incurred restructuring costs of $208.55 million in 2023, compared to none in 2022[76] - Depreciation and amortization expenses decreased to$ 548.85 million in 2023 from $648.78 million in 2022[76] - Property, plant, and equipment increased by 23% to$ 2,006.46 million, driven by investments in machinery, office equipment, and completed construction projects[82] - Right-of-use assets decreased by 21% to $659.36 million due to depreciation, lease renewals, and currency fluctuations[83] - Construction in progress rose by 25% to$ 638.05 million, primarily due to investments in self-developed software and building construction[84] - Intangible assets grew by 2% to $8,267.11 million, driven by acquisitions and additions of patents and technologies[85] - Equity in associates and joint ventures increased by 29% to$ 438.27 million, mainly due to acquisitions and increased investments[86] - Deferred tax assets decreased by 2% to $2,467.28 million, influenced by tax losses and temporary differences[87] - Financial assets at fair value through profit or loss increased by 12% to$ 1,233.97 million, driven by additional investments and fair value gains[88] - Inventories decreased by 23% to $6,371.86 million, reflecting reduced raw material levels due to slower market demand[90] - Trade receivables and bills dropped by 30% to$ 7,940.38 million, primarily due to lower Q4 revenue compared to the previous year[91] - Cash and cash equivalents increased by 8% to $4,250.09 million, supported by operating cash flow and financial activities[94] - Non-current loans increased by$ 1.05 billion, primarily due to the issuance of $1.25 billion in 2028 and 2032 notes, and$ 675 million in 2029 convertible bonds, partially offset by the repurchase of $455 million in 2024 convertible bonds[98] - Warranty provisions decreased by 19% due to reduced business activity during the year[99] - Deferred revenue decreased by$ 70.16 million, mainly related to warranty services not yet fulfilled[100] - Retirement benefit liabilities decreased by 24% due to changes in actuarial assumptions and exchange rate fluctuations[101] - Other non-current liabilities decreased by 35% due to the reclassification of put option liabilities to current liabilities[102] - Trade payables and notes decreased by 26% due to lower inventory levels and eased component supply shortages[104] - Other payables and accrued expenses decreased by 18% due to reduced business activity and reclassification of put option liabilities[105] - Provisions increased by 4%, mainly due to restructuring provisions, partially offset by lower warranty provisions and exchange rate effects[106] - Current deferred revenue increased by 10% due to additional services and reclassification of non-current liabilities[107] - Current loans decreased by 66% due to the repayment of 2023 notes and reclassification of 2024 convertible bonds[108] - The company's credit facilities include a revolving loan of $1.5 billion issued on March 28, 2018, with a 5-year term, and another revolving loan of$ 2 billion issued on July 4, 2022, also with a 5-year term[113] - Trade credit available as of March 31, 2023, was $4.97 billion, with$ 3.454 billion utilized, compared to $4.053 billion available and$ 2.813 billion utilized in 2022[114] - The company has outstanding notes and convertible bonds, including $1 billion in 2025 notes with a 5.875% interest rate and$ 929 million in 2030 notes with a 3.421% interest rate[115] - As of March 31, 2023, the company's cash and cash equivalents stood at $4.321 billion, compared to$ 4.023 billion in 2022[116] - The company's net cash position as of March 31, 2023, was $366 million, down from$ 602 million in 2022[116] - The loan-to-equity ratio as of March 31, 2023, was 0.65, slightly up from 0.63 in 2022[116] - The company's outstanding forward foreign exchange contracts as of March 31, 2023, amounted to $9.486 billion, down from$ 12.447 billion in 2022[117] - The company's total equity as of March 31, 2023, was $6.047 billion, up from$ 5.395 billion in 2022[116] - The company's short-term money market credit available as of March 31, 2023, was $1.838 billion, with$ 54 million utilized, compared to $1.154 billion available and$ 54 million utilized in 2022[114] - The company's convertible bonds issued on August 26, 2022, amount to $675 million with a 2.5% interest rate and a 7-year term[115] Business Growth and Transformation - The company is expanding into new growth areas such as servers, storage, mobile devices, software, solutions, and services, leveraging its "Device-Edge-Cloud-Network-Intelligence" technology architecture[2] - Lenovo's collaboration with Toyota on a virtual desktop infrastructure (VDI) solution enabled flexible remote work for design engineers, improving efficiency and adaptability during the pandemic[4] - SSG (Solutions and Services Group) business achieved double-digit growth with an operating profit margin exceeding 20%[12] - ISG (Infrastructure Solutions Group) business grew over 30% year-over-year, significantly outpacing market average growth[12] - Non-PC business significantly increased its share in the company's overall revenue, marking a key milestone in the transformation from a hardware manufacturer to a solutions and services provider[12] - PC shipments outperformed the market, maintaining the company's global leadership in market share and profitability[12] - The company expects the PC industry to bottom out and potentially recover growth by the second half of 2023[12] - The company aims to double R&D investment in the "New IT" sector, with one in five employees engaged in R&D and innovation[13] - The company launched several innovative products, including rollable screen laptops, Yoga Book 9i, ThinkPhone, and ThinkReality VRX[13] - Lenovo's Infrastructure Solutions Group (ISG) revenue grew 37% to a record$ 9.8 billion, with operating profit reaching $98 million[26] - ISG's storage revenue more than tripled, and ThinkEdge edge computing product sales increased over 1.7 times year-over-year[26] - ISG's server and software revenue reached a historic high, growing 25-30% year-over-year[26] - ISG's global storage market share nearly doubled in 2022 compared to the previous year[26] - Lenovo's non-PC business grew 7%, accounting for nearly 40% of the company's total revenue, a 7 percentage point increase year-over-year[22] - Lenovo's PC business revenue declined 14% to$ 61.9 billion, with currency fluctuations contributing a 5% negative impact[22] - Lenovo's net profit attributable to equity holders decreased 21% to $1.6 billion, or 10% excluding one-time restructuring and other expenses[22] - Lenovo's R&D expenses increased 6% year-over-year[22] - Lenovo's cash conversion cycle improved to -2 days, a 12-day reduction year-over-year, with inventory decreasing by over$ 1.9 billion[22] - Lenovo's Intelligent Devices Group (IDG) revenue declined 21%, with operating profit decreasing 24% year-over-year[25] - Solution Services Group revenue increased by 22% YoY to $6.7 billion, with operating profit up 16% to$ 1.4 billion, achieving an operating margin of 20.9%[27] - Deferred revenue rose by 2% YoY to $3 billion, reflecting strong demand for subscription-based and pay-as-you-go models[27] - Infrastructure Solutions Group revenue nearly doubled in the Americas, driven by new orders and a richer product portfolio[28] - In Asia-Pacific (excluding China), Infrastructure Solutions Group recorded double-digit growth due to strong performance in cloud and SMB IT infrastructure[28] - China market revenue declined by 19% YoY, impacted by pandemic controls and economic slowdown, but Solution Services Group saw strong growth driven by "as-a-service" and vertical solutions[28] - EMEA revenue fell by 16% YoY, with Infrastructure Solutions Group and Solution Services Group achieving double-digit growth despite macro headwinds[28] - Currency translation impact on revenue was 5% due to the strong US dollar, while net financing costs increased by 69% YoY due to rising interest rates[29] - Lenovo showcased its product portfolio at CES 2023, winning 129 awards, with the Yoga Book 9i receiving 50 awards, a record for a single product[29] - Infrastructure Solutions Group expanded its edge-to-end product portfolio, including the new ThinkEdge SE10, and launched Lenovo Open Cloud Automation 2.6 and XClarity orchestration[29] - Solution Services Group is expected to increase its financial contribution due to strong growth prospects in digital workplace, hybrid cloud, and sustainability services[30] - The company's non-PC business contributed a record 40% of revenue in the second half of the fiscal year[32] - The company employs approximately 77,000 people globally as of the end of the fiscal year 2022/23[33] - The company aims to achieve net-zero emissions by 2050 and is integrating ESG features like carbon offset services into its service offerings[31] - The company's TruScale brand and on-demand services have strengthened its competitive position in the "as-a-service" market[32] - The company's infrastructure solutions business continues to drive high growth and profitability, supported by the ODM+ model[32] - The company is focusing on the "3S" strategy (Smart IoT, Smart Infrastructure, and Industry Intelligence) to drive transformation and innovation[32] - The company is enhancing its service business as a structural growth engine, particularly in hybrid work, multi-cloud management, and network security[31] - The company faces strategic risks due to intense competition and rapidly evolving technology trends, which it addresses through innovation and service-oriented transformation[35] - The company's smart device business maintains a leading position in the PC market and shows strong performance in non-PC smart devices and smart space solutions[32] - The company is prioritizing resource allocation to strategic goals to ensure effective execution of its transformation initiatives[36] - The company may acquire or invest in companies and businesses as part of its business transformation and long-term growth strategy, with strict due diligence procedures in place to ensure proper valuation and approval of assets[37] ESG and Sustainability - The company's 2050 net-zero emissions target has been approved by the Science Based Targets initiative (SBTi)[15] - Lenovo's climate and energy policy focuses on five key areas: internal operations, energy suppliers and their operational emissions, supply chain, customers, and government/non-profit organizations supporting the transition to a low-carbon economy[48] - Lenovo uses the GeSI-CDP scenario analysis tool to explore climate-related scenarios, helping identify gaps in financial impacts and cross-functional team engagement[48] - Lenovo's annual ESG report follows the Hong Kong Stock Exchange's listing rules and references the Global Reporting Initiative (GRI) standards, aiming to align with the TCFD framework by 2025[49] - Lenovo conducts preliminary financial and feasibility studies to determine the next steps toward achieving net-zero by 2050[49] - Lenovo ensures compliance with environmental laws and regulations in regions where it promotes and sells products, relying on internal and external experts, third-party labs, and internal tools[52] - Lenovo's Ethics and Compliance Office (ECO) oversees the organization's ethical and compliance functions, promoting a culture of legal and ethical business practices[53] - Lenovo maintains a zero-tolerance policy towards bribery and corruption, ensuring compliance with anti-bribery laws in all operational markets[55] - Lenovo prohibits anti-competitive practices such as price-fixing, limiting product supply, or boycotting customers or suppliers[56] - Lenovo emphasizes the protection of intellectual property through patents, copyrights, trademarks, and contractual rights[57] - Lenovo adheres to international trade laws, including customs, import/export controls, and economic sanctions[58] - Lenovo has a global privacy and data protection program led by the legal department, ensuring compliance with privacy regulations and safeguarding personal data[59] - Lenovo encourages employees to report unethical or illegal activities through multiple confidential channels, including a 24/7 hotline[60] - Lenovo engages with stakeholders through market research, employee surveys, supplier audits, and community partnerships[61] - Lenovo's Love On Global Service Month in 2022 involved 73 offices globally, increasing volunteer participation and community impact[61] - Lenovo Foundation's TransforME initiative donated$ 1 million in FY2022/23 to address the technology skills gap through adult training programs[61] - Lenovo collaborates with industry associations to adopt best practices and assess progress in environmental, social, and governance commitments[61] - Lenovo ranked 24th in the BCG Innovation 50 list for 2022, up one position from 2021, specifically recognized for its role in climate and sustainability innovation[63] - Lenovo achieved a CDP Leadership (A-) rating for its efforts in climate change, water security, and supplier engagement[63] - Lenovo received the highest rating (AA+) in the IT industry and the best overall score in the 2022 Hang Seng Corporate Sustainability Index[63] - Lenovo was included in the 2023 Bloomberg Gender-Equality Index, reflecting its commitment to gender equality and inclusive culture[64] - Lenovo scored 90% in the 2022 Disability Equality Index and was recognized as a "Best Place to Work for Disability Inclusion"[64] - Lenovo was awarded the Gold Prize in the 2022 HKICPA Corporate Governance and ESG Excellence Awards, marking its 10th consecutive year of recognition[65] - Lenovo successfully issued its first $625 million green bond as part of a$ 1.25 billion dual-tranche 144A Rule/S Regulation bond offering[65] - Lenovo achieved an AAA rating in the 2022 MSCI ESG Ratings assessment, the highest possible rating[65] - Lenovo was recognized as the most improved company in the LGBTQ+ Inclusion Index through its partnership with Workplace Pride[64] - Lenovo's "We Are Lenovo" culture emphasizes customer service, innovation, entrepreneurship, and integrity as core values[67] Corporate Governance - The company has complied with the Corporate Governance Code of the Hong Kong Stock Exchange for the fiscal year ending March 31, 2023, except for the separation of the roles of Chairman and CEO as per Code Provision C.2.1[126] - The Board believes that having Mr. Yang Yuanqing as both Chairman and CEO is appropriate and in the best interest of the company, ensuring strategic continuity and operational stability[126] - The Board has appointed William O