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Lenovo aims to raise EMEA margins by 50 percent: executive

Lenovo's laptop PCs are displayed at an electronic shop in Tokyo September 5, 2012. REUTERS/Kim Kyung-Hoon
Lenovo's laptop PCs are displayed at an electronic shop in Tokyo September 5, 2012. REUTERS/Kim Kyung-Hoon

By Matt Smith

DUBAI (Reuters) - Lenovo Group Ltd, on track to become the world's top PC maker, has bolstered its presence in Europe, the Middle East and Africa (EMEA) and aims to raise regional operating margins by about 50 percent, a top company executive said on Wednesday.

The Chinese company's profit growth slowed in the second quarter, although it beat expectations and outpaced results from its main rivals, such as Hewlett-Packard Co, Dell Inc and Acer Inc.

Yet uncertainty over the future of the PC market - seen by some analysts as a ‘sunset' industry - has spurred Lenovo to expand into mobile computing and smart phone handsets.

The company's operating margin in EMEA was 2 percent in the second quarter and it aims to raise this to 3 percent "in the next 18 months - by the end of the next financial year", Gianfranco Lanci, Lenovo president for the EMEA region, told Reuters.

He said these gains were achievable because the company had already beefed up its operations in the Middle East, Eastern Europe and the former Soviet Union.

"It's a matter of scaling expenses. We have the right set up," he said. "We can see growth coming without adding too much in terms of resources. We still need to look into how we can invest in branding."

Lenovo's smartphones, such as LePhones, have gained traction in China with the PC maker ranking second in market share in the second quarter, behind Samsung Electronics, IDC data showed.

The Chinese manufacturer launched smart phones in Russian speaking countries this month, the first time these handsets have been sold in the EMEA region.

"When you look at all the localization and approvals you need to do, you go with the big countries first," said Lanci.

"We are number one in Russia (in PC sales) - we start to see a strong brand, a strong presence and this is important when we look at smart phone launch."

Lenovo sells 15 to 20 different smart phone handsets in China and will select four to five mid to high-end models to sell in Russia.

Lanci said the company would also look to launch smart phones in other emerging markets within EMEA.

"It's not going to be Western Europe - we have a stronger presence in emerging markets than mature markets," he added.

"Western Europe is a market very driven by (telecom) operators - in emerging markets it's open, there is no subsidy. It's a totally different business model."

(Reporting by Matt Smith)

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