The company's financial report for the fourth quarter of fiscal year 2023, ending on March 31, reveals a staggering 24% year-on-year decline in revenue, amounting to $12.635 billion. Additionally, pre-tax profit plummeted by 75% to $130 million, primarily due to charges related to workforce restructuring.
PC sales had been the major market supercharging Lenove earnings. Notably during the COVID-19 crisis, personal computers became indispensable tools for work, education, and entertainment. As a result, manufacturers like Lenovo struggled to meet the surge in demand, leading to widespread stock shortages.
PC shipments reached their peak at 350 million in 2021, and industry experts anticipated that this robust market trend would continue. However, saturation has set in, causing a slowdown in procurement and an oversupply of unsold inventory in its channel.
In the first quarter of 2023, the global PC market's as reflected in Gartner's data recorded a 30% drop in shipments across the industry to 55.154 million units aligning with Lenovo's Q4 performance.
Lenovo's Intelligent Devices Group, encompassing PCs and smart gadgets, bore the brunt of this poor performance. Its revenue dwindled to $9.79 billion, marking a severe decline of 33.3% compared to the previous year.
This is also similar to its previous quarter, when Lenovo experienced its worst profit decline in 14 years, prompting the company to devise a cost-saving plan aimed at reducing annual overheads by $850 million.
Lenovo faces significant challenges as the demand for personal computers weakens after the surge experienced during the pandemic. The company is working to adapt to the shifting market landscape and streamline its operations to remain competitive in the evolving technology industry.