Lenovo profit more than doubles to exceed expectations

China’s Lenovo Group, the world’s largest maker of personal computers, has delivered a better-than-expected jump in profits in its first quarter as Covid-19 restrictions continued to boost demand for work-from-home.

Shares of the company rose a whopping 9.7% after results and were on track for their biggest daily percentage gain since March 30.

Earnings for the quarter ended June 30 increased 119% to $466 million, from $213 million in the year-ago quarter, and above an average estimate of $345.23 million by six analysts, according to data from Refinitiv.

Revenue rose 27% to $16.9 billion, from $13.3 billion a year earlier. Analysts expected revenue of $16 billion.

It also posted a net profit margin of 2.8%, which the company says was the highest in many years

Lenovo said a recovery in IT spending boosted demand and supported higher average selling prices for its products, and expected the overall personal computer market to continue to grow over the next five years.

“The accelerated digital and intelligent transformation has created significant market opportunities worldwide,” Lenovo chairman and CEO Yuanqing Yang said in a statement.

“We will continue to increase R&D investment, aiming to double it over the next three years.”

The results were the company’s first results since it reorganized its business groups in February.

Analysts say pandemic-driven consumer demand for PCs is beginning to decline, but shortages of components such as chips, driven by stronger-than-expected global demand for PCs, tablets and electronic cars, remain an industry concern.

Worldwide shipments of personal computers rose 13% year-on-year to 82.3 million units in the second quarter of 2021, with desktop shipments growing for the first time since the fourth quarter of 2019, research firm Canalys said in a report last month.

Lenovo extended its industry lead by shipping more than 20 million units for the third straight quarter and achieving 24.4% market share, compared to HP Inc at 22.6% and Dell at 17%, Canalys said.