Revenue up for Epson’s Fiscal Year, but Profits Down

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Epson high-speed color inkjet copier/MFP with replaceable ink packs.

Seiko Epson of Tokyo, Japan, reported results for its fiscal year that ended on March 31, 2018, reporting revenue of  ¥1,102.1 billion, up ¥77.2 billion year-over-year. Business profit was ¥74.7 billion, up ¥8.9 billion. However, profit for the period was ¥41.7 billion, down ¥6.6 billion.

Net income was 41,581 million yen (U.S. $391,129 thousand), down 25.7 percent versus the previous fiscal year.

Epson stated that fiscal 2017 revenue and business profit were positively affected by the weak Japanese yen, adding ¥33.8 billion extra to revenue and ¥12.6 billion extra to business profit.

Overall, it says demand for high-capacity ink-tank printers “expanded steadily and “large-format inkjet printer demand stayed firm.” Serial-impact dot-matrix (SIDM) printer demand contracted in China after spiking last year with the enactment of B2V tax reforms. Demand also shrank in the Americas and Europe.

Projector demand shrank. In addition to the absence of major sporting events in Europe, demand from the education sector in some of the major countries in Europe contracted while North American retail market sales remained sluggish.

Demand for smart phones, one of the main markets for Epson’s crystal devices for electronic products, contracted due to market maturation in China. Demand for Epson smart watches gradually recovered in Japan. Demand for watch movements was firm. Demand for industrial robots expanded, particularly in China.

Overall, Epson says that in its latest fiscal year, it continued to “steadily expand sales of products such as high-capacity ink tank printers, large-format printers in growth markets, high-lumen projectors, and robots.”

Printing Solutions Group

Epson says that its Printing Solutions group “saw a sharp increase in revenue and profit growth.” Printer-business revenue sharply increased primarily due to the effects of the weak yen, but also due to continued strong sales of high-capacity ink-tank inkjet printers and All-in-Ones/MFPs. Shipments of these models reached 7.8 million units, a 1.7 million unit increase versus the previous year.

Revenue generated by the Printing Solutions group was ¥736.6 billion, up 7.3 percent year-over-year. Segment profit was ¥94.8 billion, up 12.8 percent year-over-year.

Professional-printer revenue increased, largely due to expanded sales of large-format printers for signage, textiles and label printers, and to the weak yen.

Epson says that profit for its Printing Solutions group increased due to a combination of revenue growth and the effects of a weaker yen, which more than compensated for both planned strategic investment in growth, including spending on promotional campaigns and sales’ organization improvements for products such as Epson’s  high-speed line-head inkjet MFPs that it  launched worldwide in fiscal 2017, and unanticipated costs, such as higher transportation expenses arising from a fire at a supplier’s facility.

Epson states that overall for its printer business, it is seeking to:

  • Change the printer business model by accelerating a switch from ink-cartridge printers to high-capacity ink tank models.
  • Provide greater customer value, including a smaller environmental
    footprint and lower Total Cost of Ownership.
  • Dramatically lower printing costs to generate new business value
  • Accelerate roll-out and adoption in developed economies as well as emerging markets.
  • With ink-cartridge printers, focus on high-added-value models.

Epson’s inkjet printer sales have been gradually shifting from ink-cartridge to refillable ink-tank models. In its last fiscal year, ink-tank models made up almost half of its inkjet-printer sales; back in its fiscal year 2012, ink-tank models made up only about 10 percent of its inkjet-printer sales. For its current fiscal year, it’s projecting that ink-tank printer sales will make up more than half of its inkjet printer sales.

As for the professional-printer market, Epson says that it will continue to promote it inkjet printers for the commercial and industrial sectors, for printing signage, textiles, and labels.

For its Printing Solutions group, Epson is forecasting revenues of 700 billion yen, down 36.6 percent versus the previous fiscal year, but profits of 100 billion yen, up 5.1 percent versus the previous fiscal year.

Overall Forecast

For its current fiscal year that will end in March 2019, Epson is  forecasting ¥1,050 billion in revenue, a decline of ¥52.1 billion year-over-year, and ¥80 billion in business profit, an increase of ¥5.2 billion. It expects ¥58 billion in profit for the period, an increase of ¥16.2 billion.

This  outlook is based on assumed exchange rates of 100 yen to the US dollar and 125 yen to the euro.

A presentation of Epson’s fiscal year is available here.

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