Lenovo Group has announced results for its second fiscal quarter ended September 30, 2016. Revenue was US$11.2 billion, an eight percent decrease year-over-year, yet a 12 percent increase over the first fiscal quarter ended June 30, 2016. Pre-tax income for the second quarter was US$168 million, a significant turnaround from last year’s second quarter loss of US$842 million. Similarly, net income turned around from a loss of US$714 million in the second quarter last year, to US$157 million this year.

Lenovo’s solid performance came at a challenging time in the industry, with both the PC and tablet markets down, and smartphones and servers showing only modest growth.

“Market conditions remained challenging but we delivered solid results. Our PCSD business maintained leadership and strong profitability, our Mobile business had good quarter-to-quarter volume growth and margin improvement, and our Data Center business is actively addressing its challenges,” said Yang Yuanqing, Chairman and CEO, Lenovo. “We have also added several of the industry’s top minds into Lenovo, and are continuing to strengthen our leadership team. We remain confident in our vision, our strategy and our team’s ability to achieve new heights.”

Gross profit for the second fiscal quarter increased two percent year-over-year, to US$1.6 billion, with gross margin at 14.3 percent. Operating profit for the second quarter was US$215 million, compared to a loss of US$784 million at the same time last year. Basic earnings per share for the quarter was 1.42 US cents, or 11.01 HK cents. As of September 30, 2016, the Company’s net debt was US$77 million. Lenovo’s Board of Directors declared an interim dividend of 6 HK cents per share.

Geographic Overview

In China, consolidated sales in the second fiscal quarter declined four percent year-over-year to US$3.2 billion, or 29 percent of the Company’s total worldwide sales. Pre-tax income increased marginally to US$158 million year-over-year, while pre-tax income margin gained almost a full point, to 4.9 percent.

In Asia Pacific in the second fiscal quarter, Lenovo booked sales of US$1.9 billion, or 17 percent of the Company’s total worldwide sales, down four percent year-over-year. Pre-tax income declined to US$2 million, while pre-tax income margin dropped almost a full point, to 0.1 percent.

In Europe, Middle East and Africa, Lenovo had consolidated sales in the second fiscal quarter of US$2.7 billion, a decrease of 14 percent year-over-year, representing 24 percent of the Company’s total worldwide sales. The region had a pre-tax loss of US$65 million and pre-tax loss margin of 2.4 percent.

In the Americas, consolidated sales in the second fiscal quarter declined seven percent to US$3.4 billion, or 30 percent of the Company’s total worldwide sales. Pre-tax income for the quarter was US$20 million, compared to a loss of US$73 million compared to last year. Pre-tax income margin was 0.6 percent.