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Lenovo Reports Fourth Quarter and Full-Year 2006/07 Results

   

HONG KONG, May 23, 2007 – Lenovo Group today reported results for its fourth fiscal quarter and full year ended March 31, 2007. Consolidated revenue for the quarter rose 9 percent year over year to US$3.4 billion, driven by stronger performance in all geographies and product segments.

During the fourth quarter, Lenovo's worldwide PC shipments grew more than 17%, well ahead of the industry average of approximately 11 percent. Including the impact of restructuring, Lenovo reported pre-tax income of US$66 million and basic earnings per share of 0.70 US cents, or 5.46 HK cents. The Company’s gross profit margin for the fourth quarter reached 15.2 percent, a record for a quarter that reflected the full impact of the acquired business. Net cash reserves as of March 31, 2007, totaled US$946 million. Lenovo's board of directors has proposed a final dividend of 2.80 HK cents, or 0.36 US cents per share.

"It was a solid quarter and strong fiscal year by any number of measures," said Lenovo's chairman, Yang Yuanqing. "Our performance confirms we have not only stabilized our business worldwide, but also that our focus on transactional business and emerging markets is beginning to reap very positive results. Lenovo posted gains in market share, revenue and profit in both the notebook and desktop segments as well as in all of our operating geographies, with the Americas business returning to profitability."

"We have significantly improved our business performance, and now we must build on our momentum and strive to grow faster and more profitably than the industry by providing the best-engineered PCs available on the market today," said William J. Amelio, president and chief executive officer. "Our recently implemented strategic measures – to implement a transaction model globally, improve our supply chain efficiency, enhance our desktop competitiveness, and build the Lenovo brand – will move us swiftly toward closing the efficiency gap between Lenovo and our competitors. We will continue to combine cost competitiveness and efficient delivery capabilities with innovative products to drive increased market share."

GEOGRAPHIC OVERVIEW

PRODUCT OVERVIEW

FULL YEAR RESULTS For the 2006/07 fiscal year, consolidated revenue increased 10 percent year over year to US$14.6 billion. Lenovo's PC shipments grew 12 percent year over year, ahead of the industry average of 10 percent. In the same period, pre-tax income (excluding restructuring) grew 29% to US$200 million. The Company's full-year gross profit margin reached an annual record 14.0%.

Reflecting the impact of restructuring, Lenovo reported full-year profit attributable to shareholders of US$161 million and basic earnings per share for the 2006/07 fiscal year of 1.87 US cents (or 14.61 HK cents) versus 0.25 US cents (or 1.95 HK cents) for the 2005/06 fiscal year.

About Lenovo Group Ltd. Lenovo (HKSE: 992) (ADR: LNVGY) is dedicated to building the world's best-engineered personal computers. Lenovo's business model is built on innovation, operational efficiency and customer satisfaction, as well as a focus on investment in emerging markets. Formed by Lenovo Group's acquisition of the former IBM Personal Computing Division, the company develops, manufactures, and markets reliable, high-quality, secure, and easy-to-use technology products and services worldwide. Lenovo has major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina. For more information, see www.lenovo.com .