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Feb. 20, 2020, 12:00 a.m. EST

Lenovo profit surges, beating expectations

By Yifan Wang

Lenovo Group Ltd. (0992.HK) said its net profit for the fiscal third quarter rose 11% on year, on the back of record-high quarterly sales and better profitability due to improvement in its product mix.

Net profit for the October-to-December period was $258 million, compared with $233 million over the same period a year earlier, the world's largest PC maker by shipments said Thursday. The figure was higher than a FactSet consensus estimate for the quarter's net profit at $217 million.

Revenue edged up to $14.10 billion from $14.04 billion a year earlier, breaking its quarterly sales record, Lenovo said.

Gross margin also expanded by 1.5 percentage points on year to 16.1%, as the company continued to shift to premium and high-growth PC products such as gaming computers, it said.

As the coronavirus epidemic continues to evolve, the company said it expects potential volatility in business performance in the short term.

Although the company's factories in China have resumed partial production, its suppliers and logistics partner's operations remain disrupted due to manufacturing suspension and transportation restrictions to contain the outbreak, Lenovo said.

The company said it believes its global manufacturing capacities would help it weather the situation well.

Write to Yifan Wang at yifan.wang@wsj.com

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