Lenovo gives warning about price hikes to absorb U tariffs, sliding shares

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(Reuters) – The Chinese Lenovo Group, the world's largest computer manufacturer, warned that it must raise product prices if US tariffs increase, launching its shares falling by 6.5% to two months.

FÓN FILE: A man uses his laptop next to the Lenovo logos during the World Mobile Conference in Barcelona, ​​Spain, February 25, 2016. REUTERS / Albert Gea

Lenovo's warnings of growing business uncertainty due to the US-China trade war cast doubt on its sales outlook and disrupted quarterly forecast results when strong PC sales helped the company more than double its profits.

President U. Donald Trump said this week that he would postpone an additional 10% tariff on Chinese-made products, including tablets and laptops until December, but would put the tariffs on computers. September yet.

“Retail prices for products such as PCs and smartphones will increase if tariffs increase (U.),” said Lenovo Chairman Yang Yuanqing on Friday's earnings call.

He also said that the price of the product would increase from the switchover from China to US tariffs. to avoid, while flexibility in Lenovo's global production offers flexibility, and is always committed to China.

The global PC market grew by 1.5% in the June quarter after it had fallen for two consecutive quarters, due to threats to U. increased tariffs on Chinese goods prompted some leading freight manufacturers, who were t industry analysts said.

Lenovo emerged as the biggest winner who came upon a global market surprise rebound in the second quarter. Quoting industry data, the company said that there was a 25.1% market share in the quarter.

Lenovo said it was the fastest growing computer manufacturer among the top five manufacturers and its enhanced product mix helped the business' pre-tax profit margin to 5.4%, the highest ever margin in the fiscal quarter.

Lenovo's personal group of computers and smart devices grew 12%, and its mobile business group showed a 9% drop in sales.

Its PC business and smart devices generate more than three quarters of the total income of the group, which increased by 5%.

A net profit rose to $ 162 million in the quarter ended June, compared with an average estimate of $ 154 million at nine analyzes, according to Refinitiv data. Revenue rose to $ 12.51 billion, in line with expectations.

Reporting by Rushil Dutta and Sijia Jiang; Edited by Stephen Coates, Miyoung Kim and Muralikumar Anantharaman

Our Standards:The principles of Thomson Reuters Trust.

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