Epson Stumbles in Latest Fiscal Quarter, but Reports Increased Sales of High-Capacity Ink-Tank Printers

Epson - Swimming in Ink

Epson’s “Swimming in Ink” event held last summer in New York City.

On July 28th, Seiko Epson of Tokyo, Japan, reported results for its April to June fiscal quarter, with business profit down 60.8 percent to  ¥6.4 billion; profit from operating activities down 57.2 percent to ¥6.9 billion; and profit before tax down 60.3 percent to ¥6.3 billion, all versus the same quarter a year ago. Profit for the period was ¥4.2 billion, down 60.2 percent versus the same quarter a year ago.

Printing Solutions Segment

Overall, Epson reports that in the quarter, inkjet-printer demand in North America shrank, while consumer-inkjet printer demand continued to contract sharply in Japan. 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.” Serial-impact dot-matrix (SIDM) printer demand was firm in China, where a major tax overhaul produced extra demand in the tax-collection market, but demand continued to contract in the Americas and Europe.

For the quarter, the Printer group’s revenue declined. In inkjet printers, Epson says it succeeded, however, in expanding sales of high-capacity ink tank printers, as “steep” unit-shipment growth continued, despite the entry of competitors into this market. Nevertheless, total inkjet-printer revenue declined, it says chiefly due to a contraction of the ink-cartridge printer market and a concomitant decrease in unit volume, as well as foreign-exchange effects.

Epson saw ongoing growth in sales of consumables, however, after excluding the effects of the yen’s appreciation.

For SIDM printers, foreign-exchange effects caused revenue to decline despite ongoing extra demand in the Chinese tax-collection system market.

Revenue for Epson’s professional-printing business also declined. Total revenue from large-format printers declined despite strong sales of Epson’s new products in the growing signage-printer market, and firm demand in the textile-printer segment, although a slow economy “tempered revenue in the latter.” Total revenue declined, as Epson says revenue in the existing photo- and graphics-printer markets “fell in response to intensified price competition and foreign-exchange effects.”

Revenue from consumables declined due to a decline in printer-unit sales and foreign-exchange effects.

POS (point-of-sale) printer-system product revenue also declined. 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. Revenue was also hurt by foreign-exchange effects.

Segment profit in Epson’s printing -solutions segment declined even though Epson says it saw increased sales of high-capacity ink-tank inkjet printers and maintained profit by increasing sales of consumables as the installed base improved. It attributes the decline in segment profit primarily to a decrease in large-format inkjet printer sales, strategic investment, and spending on medium-term growth, and foreign-exchange effects.

As a result, revenue in the printing solutions segment was ¥157.3 billion, down 8.5 percent versus the same quarter a year ago. Segment profit was ¥12.8 billion, down 33.2 percent year-over-year.

Forecast

Epson is maintaining its previous fiscal forecast, projecting revenue of ¥1,030.0 billion and profit of ¥54.0 billion for its full fiscal year.

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