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Lenovo profit beats expectations, helped by remote working trend

HONG KONG (Reuters) - China's Lenovo Group 0992.HK, the world's biggest PC maker, posted a better-than-expected quarterly profit on Tuesday and said it is continuing to benefit from "new normal" remote working after COVID-19.

FILE PHOTO: An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. REUTERS/Jason Lee

The Chinese giant said it set new records for group revenue, pre-tax income and net income, and all three key business groups delivered year-on-year growth for the first time in six quarters.

“Last quarter was what I would call a perfect quarter for Lenovo,” Chairman Yang Yuanqing told Reuters in a post-results interview.

“I hope the current quarter could be even better.” he said.

Lenovo reported a 53% jump in net profit for the quarter ended September to $310 million (239.8 million pounds), beating average analyst estimate of $224 million, according to Refinitiv data.

Revenue increased 7% to $14.5 billion.

With the pandemic forcing companies worldwide to seek work-from-home options and people preferring to stay indoors, the company expects to benefit from increased sales of PCs and tablets.

“Our gaming PCs and our thin-and-light PCs actually grow margin faster than other products,” said Yang.

According to research firm Gartner, worldwide shipments of personal computers rose 3.6% in the July-September quarter, due to home entertainment and distance learning needs, along with the strongest growth the U.S. PC market has seen in 10 years.

Yang predicted a further 5% to 10% industry-wide increase of total addressable market for PCs next year.

Lenovo strengthened its lead in PCs with 25.7% of the market, ahead of HP Inc HPQ.N and Dell Technologies DELL.N which had 21.6% and 15.2% share, respectively.

Yang said a component supply shortage, particularly for display and integrated circuit, is keeping the company from meeting 100% customer demand.

“The issue is not demand, it’s supply. If we can fill enough supply, we can sell more products,” he said.

Reporting by Pei Li; Editing by Muralikumar Anantharaman and Krishna Chandra Eluri

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