Revenues, Profits, Decline for Epson, but High-Capactiy Ink-Tank Printers’ Revenues Expand

Epson L Series refillable ink tanks.

On January 31, 2017, Seiko Epson of Japan reported results for its nine-month period of April 1 to December 31, 2016, reporting revenue of  ¥765.8 billion, down 8.5 percent; business profit of ¥54.0 billion, down 25.7 percent; and profits of  ¥47.0 billion, down 14.7 percent, all versus the previous year’s same nine months.

The firm says that in the nine months (the first three quarters of its fiscal 2016 year), currency-exchange rate fluctuations – specifically, the appreciation of the Japanese yen – negatively impacted its revenue by ¥91.7 billion and its business profit by ¥23.0 billion. If the impact of foreign-exchange rate fluctuations are excluded, Epson says it “achieved steady growth compared to the previous year.”

Printing Solutions Segment

Epson states that demand for inkjet printers continued to decline, as the Japanese consumer market continued to contract sharply and the North America also shrank. On the other hand, it says there was “solid demand” for high-capacity ink tank printers, as the entry of other companies had the effect of boosting recognition. Large-format inkjet printer demand was “firm: in North America and Japan, but demand in China and Latin America was subdued due to the effects of “economic deceleration.”

Total inkjet printer revenue declined. High-capacity ink-tank printer revenue, however, continued to expand, as the entry of other companies into the high-capacity ink tank printer market boosted market recognition and helped to fuel a “sharp increase in unit shipments.” However, given the contracting market, unit shipments of ink-cartridge models declined mainly in the home market. Revenue was also “dragged down” by foreign-currency exchange-rate effects. Although consumables unit volume decreased, Epson says its product mix is improving, with consumables for office printers, which have a higher unit price, accounting for a greater percentage of total consumables sales. However, revenue from consumables decreased due to the negative effects of foreign-currency exchange-rate effects.

In its SIDM (serial impact dot matrix) printer business, Espon says foreign-currency exchange-rated effects caused revenue to decline, although extra demand in the Chinese tax collection system market continued during the first half of the year.

Professional Printers Segments

Revenue for Espon’s professional-printing business declined.

Total revenue from large-format printers decreased, partly due to exchange-rated effects.

Sales of Epson’s new products in the growing signage-printing market “were strong,” and demand in the textile-printer segment was “firm,” although it says a slow economy tempered revenue in the latter. Total revenue decreased, however, because unit volume of the existing photo and graphic-arts printer markets decreased. Revenue from consumables also decreased due to a decline in printer unit sales and exchange-rate effects.

POS (point of sale) printers’ revenue decreased. Although demand for low-end models was “firm” in Europe, total unit shipments declined due to a lack of large orders, such as those received in the same period last year in Japan and North America. Unit volume also decreased in China. Revenue was also hurt by exchange-rate effects.

Segment profit in the printing solutions segment decreased even though profit rose on increased sales of high-capacity ink-tank inkjet printers. Epson says the decrease in segment profit was due to a combination of factors, including a decrease in large-format inkjet printer sales, strategic investment and spending on medium-term growth, and exchange-rate effects. As a result of these factors, revenue for Epson’s printing-solutions segment was ¥510.9 billion, down 9.0 percent year-over-year. Segment profit was ¥65.7 billion, down 19.0 percent year-over-year.

Forecast

Epson raised its forecast for revenues for its complete fiscal year that will end in March 2017 from ¥20.0 billion to ¥1.02 trillion. It also raised its business-profit forecast from ¥4.0 billion to ¥64.0 billion, and raised its forecast for profit from ¥2.0 billion to ¥48.0 billion.

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