HP Inc. Executives Discuss Second-Quarter Results
Yesterday, HP Inc. executives discussed results for HP’s second quarter, with HP reporting net revenue of $14.0 billion, up 0.2 percent versus second-quarter 2018. Net earnings were $0.8 billion, versus $1.1 billion for second-quarter 2018.
The HP Printing group’s net revenue was down 2 percent year-over-year, with a 16.4 percent operating margin, and with supplies revenue down 3 percent year-over-year. Regarding the Printer group, HP President and CEO Dion Weisler commented: “We again outperformed the market in a challenging environment. … In supplies, we are taking action, we have made and continued to make improvements in our business-management systems and to enhance our measurements of the market and our performance. We are simplifying and strengthening our pricing discipline to achieve consistency of our value proposition.”
Weisler also stated that in the second quarter, HP increased both its brand-protection activities and its online marketing, with a focus on search and demand generation. Weisler also stated that: “…growing our contractual businesses and evolving our business models remain key strategic initiatives.”
A3 Copier/MFP Progress
Weisler also stated that HP continues to make progress with A3 copier/MFPs, and in the second quarter, won several large managed print services (MPS) contracts, including a multi-million-dollar deal with Petrobras that includes HP A3, DesignJet, and PageWide inkjet products.
HP Inc. CFO Steve Fieler reported that in the second quarter, revenue was down 1 percent in the Americas, up 2 percent in EMEA (Europe, Middle-East, Africa), and up 11 percent in APJ (Asia-Pacific, excluding Japan).
Fieler noted that although printer hardware revenue was down 4 percent year-over-year, HP “outperformed the market,” gaining market share in both office and consumer segments, including A3. HP also continues to make progress in contractual offerings, with “strong growth” for its Instant Ink program – HP continues to grow revenue and its subscriber base for Instant Ink – and is also growing its MPS business.
HP’s Fieler noted again that printer-supplies revenue was down 3 percent year-over-year for the quarter. He noted that HP continues to operate below its Tier 1 channel inventory ceiling.
However, the firm is taking various actions to improve its printer-supplies businesses. As part of its business-management system, HP is implementing programs to enhance its visibility in the downstream channel. Fieler says HP has “made initial progress, lowering Tier 1 channel inventory, but there’s still more progress to be made over the next two quarters, particularly in Tier 2 and the downstream ecosystem.”
Fieler says HP still anticipates that supplies revenue will decline approximately 3 percent for the full year.
Impact of Tariffs
HP’s Weisler said the impact of current and pending tariffs on Chinese-made goods imported into the United States is still uncertain. However, he said HP is working with the U.S. administration, as well as with its supply chain – HP has manufacturing facilities all around the globe – on mitigating the effects “to ensure the best outcome for our ecosystem of customers and partners as well as our shareholders.”
According to CFO Fieler, HP will work to mitigate the effects of tariffs, including optimizing its manufacturing facilities around the world and adjusting pricing.
Fieler said that HP would “experience more of a shorter term impact that would diminish over time.” He also added that HP forecast guidance does include the impact of tariffs currently in place, but not the impact of any additional tariffs currently under consideration by U.S. administration.
Continued Fight Against Aftermarket Printer-Supplies
HP’s Weisler noted that HP’s 35-year relationship with Canon Inc. – which manufactures supplies such as toner for HP laser printers – “is stronger now than it’s ever been,” and that he had recently met with the son of Canon Inc. CEO Fujio Mitarai.
Clearly, aftermarket alternatives is not what we would want (for) either of us,” noted Weisler, “and we’re working very closely together to really think through the multi-dimensional levers that we have available to us. And I think both companies are being appropriately aggressive.” (Editor: Canon continues to aggressively request removal of aftermarket toner from Amazon, as well as file patent-litigation against afermarket suppliers.)
- May 2019: Slow Second Quarter for HP Inc.
- February 2019: Revenue Flat for HP Inc.’s First Quarter
- February 2019: A Closer Look at HP Inc.’s First-Quarter Results
- April 2019: HP Enters Textile-Printing Market with New HP Stitch Printers
- November 2018: HP Reports Stellar Fourth-Quarter, Fiscal-Year Results
- November 2018: HP Completes Acquisition of Office-Equipment Dealer Apogee
- November 2018: HP Outlines Progress, Key Strategies at ‘Power of Print’ Day
- October 2018: HP Inc. Updates on Financial Outlook
- May 2018: HP Continues to Report Strong Revenue Growth, Raises Forecast
- February 2018: HP ‘Strong out of the Gate’ for First Quarte