Revenue Up, But Profit Down for Konica Minolta’s Nine-Month Period

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Konica Minolta of Japan reported financial results for the nine months ending on December 31, 2017, with revenue up 7.2 percent to ¥750 billion, but profits down 26.2 percent to ¥18 billion, both versus the same period a year earlier.

The firm says that, for the period, all of its business groups generated higher revenue. In its Office Business group (copier/MFPs, supplies, etc.), in addition to strong sales in North America and China, sales to small- and mid-size enterprises in Europe expanded.

In the Professional Print Business segment, sales in China and other regions grew significantly in the production print business unit, and the industrial-printing business unit also posted strong growth, primarily in North America.

In the Healthcare Business, digital radiography (DR) sales rose in North America, while in the Industrial Business, the “solid performance” of the measuring instruments business unit continued, leading to a significant increase in revenue.

However, for the entire company, operating profit was ¥29.0 billion, down 15.6 percent year-over-year. The Office Business and the Professional Print Business posted lower profit, while the Healthcare Business and the Industrial Business, the latter still being driven by the measuring instruments business unit, continued to record significant increases in profit.

For the company as a whole, however, profit declined. Profit before tax came in at ¥27.1 billion (down 20.4 percent year-over-year), while profit attributable to owners of the company amounted to ¥18.6 billion (down 25.3 percent year-over-year).

In accordance with the plan for a full-scale entry into the area of precision medicine, which was introduced in Konica Minolta’s Medium Term Business Plan SHINKA 2019, in October 2017, Konica Minolta,  acting, jointly with the Innovation Network Corporation of Japan, completed its acquisition of Ambry Genetics Corporation (headquartered in California), and in November 2017, this was followed by the
completion of Konica Minolta’s acquisition of Invicro (headquartered in Massachusetts), with both companies becoming consolidated subsidiaries of Konica Minolta.

Konica Minolta says that it will put into place a new structure that incorporates Konica Minolta’s human resources and technology, moving forward with and accelerating its entry into the area of precision medicine, which it expects to provide added value, not only in the tailoring of medication and treatment to individual patients, but also in the form of improved efficiency to drug discovery and clinical trials

A Closer Look at the Office Business

In Konica Minolta’s office-products business unit, sales for both monochrome and color A3 copier/MFPs rose year-over-year. In particular, high-speed color models posted high rates of expansion following the launch of new products.

Sales volume in Europe fell in comparison to the same period of the previous fiscal year, in which some major projects were established, but North America “remained solid,” and China posted significant year-over-year growth in sales volume.

In Konica Minolta’s IT-services solution business unit, IT-infrastructure management services for medical institutions and electronic document solutions for government-related entities increased in the United States, and IT-infrastructure management services for small- and mid-size enterprises in Europe and Asia grew year-over-year.

Following on from the second quarter, the third quarter posted both higher revenue and profit compared to the same period in the previous fiscal year, “maintaining the tone of recovery.”

As a result, revenue generated by the Office Business segment stood at ¥427.7 billion, up 5.0 percent year-over-year, and operating profit came to ¥29.9 billion, down 4.3 percent year-over-year.

A Closer Look at the Professional Print Business

Konica Minolta’s production-printer business unit posted a year-over-year increase in sales volume for color products, driven by regions such as China, where sales volumes doubled year on year.

The firm says that its intelligent quality optimizer “IQ-501,” which is equipped with proprietary Konica Minolta functionality that automatically controls output, in improving the efficiency of customer workflows, has been widely accepted by customers, further enhancing its “advantage over the competition.”

In the industrial-printing business unit, sales of the Konica Minolta AccurioJet KM-1 digital inkjet press, label printers, and digital decoration-printing equipment made by MGI increased, primarily in North America.

In the marketing-services business unit, there was a continued impact from constraints on marketing costs at the company’s major customers, leading to lower revenue. In the second half of the period under review, however, revenue switched to a growth trajectory, and multiple large contracts were won from major global customers.

Profit for period for the group “turned positive,”  but the impact of lower profit in the second quarter results in profits that were down year-over-year.

As a result of these factors, revenue generated by the Professional Print Business segment amounted to ¥155.0 billion, an increase of 4.6 percent year-over-year and operating profit was ¥5.0 billion, a decrease of 25.4 percent year-over-year.

Forecast

For its complete fiscal year that will end in March 2018, the firm is forecasting revenue of ¥1,000 billion, up 3.9 percent versus the previous fiscal year, and profits of ¥31 billion, down 1.7 percent versus the previous fiscal year.

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