Sharp Decline in Operating Profit for Konica Minolta’s First Quarter

Konica Minolta of Tokyo, Japan, has reported results for its fiscal first quarter that ran from April 1 to June 30, 2019.

The company reported revenue of ¥241.7 billion, a decrease of 5.3 percent year-over-year. Among the reasons for the decline, it cited the U.S.-China trade war, a slowdown in the Chinese economy, and continuing uncertainties in the European economy, all of which it says restrained customers’ investment activities. these factors, it stated, led to a decline in revenue generated by Konica Minolta’s Office Business, its Professional Print Business, and its Industrial Business.

At the same time, revenue generated by Konica Minolta’s  Healthcare Business remained at the same level year-over-year.

Although, the company reported a shift towards high value-added sales, and its  gross profit margin remained at the same level year-over-year, operating profit plunged to ¥0.5 billion yen, a decline of 96.4 percent year-over-year. Konica Minolta says this was primarily due to lower revenue, and thus, lower gross profit in the current period, and also because ¥9.5 billion of temporary income that was generated from the liquidation of assets through sale and leaseback arrangements was recorded in the same period in the previous fiscal year.

For the quarter, Konica Minolta reported a loss before taxes of $1.3 billion yen, versus a profit before taxes of ¥15.2 billion for the same quarter a year ago. It reported a loss of ¥1.2 billion yen, versus a profit of ¥11.1 billion for the same quarter a year ago.

In its office copier/MFP group, Konica Minolta reported that sales for its Workplace Hub expanded to 20 countries, and the customer unit price also increased.

In the bio-healthcare field, Konica Minolta stated it’s ” working on numerous initiatives to accelerate business expansion,” launching, for example, genetic diagnostic services  jointly with LSI Medience Corporation in Japan.

First-Quarter Performance by Business Group

For its Office Business group, Konica Minolta reported that revenue fell 6.2 percent to ¥134.5 billion, while operating profit fell 17.0 percent to ¥7.6 billion.

For its Professional Print group, Konica Minolta reported that revenue fell 5.2 percent to ¥50.6 billion, while operating profit fell 37.2 percent to ¥1.0 billion.

For its Healthcare business, Konica Minolta reported that revenue rose 0.3 percent to ¥18.6 billion, but it reported a loss of ¥0.2 billion for the group.

For its Industrial business, Konica Minolta reported that revenue fell 10.9 percent to ¥28.1 billion, and operating profit fell 29.0 percent to ¥4.8 billion.

A Closer Look at the Office Business Unit

In its office-products business unit, the sales of A3 copier/MFPs declined year-over-year for both color and monochrome models. The company said this was primarily because a switch from old models to new models “took time while the Company launched a new product line of color models with a newly designed engine for the first time in seven years.”

In contrast, there was significant growth in sales, mainly for high-speed models, in the same period in the previous year.

In the information technology (IT) services solution business unit, Konica Minolta began “full-scale sales support for the Workplace Hub, an edge IoT platform… and a steady sales level was maintained.

The company says its Office Business segment’s sales was affected by a weak euro versus a stronger Japanese yen. As a result, the Office Business segment recorded revenue of ¥134.5 billion, a decrease of 6.2 percent year-over-year, and operating profit of ¥7.6 billion, a decrease of 17.0 percent year-over-year.

A Closer Look at the Professional Print Business

In Konica Minolta’s production print business unit, sales of color models remained at the same level, while sales of monochrome models increased year-overyear.

Regarding the sales of color equipment, in developed economies, sales of entry-level  models decreased, while the other models’ sales level remained the same as the same period in the previous fiscal year,

In the industrial printing business unit, sales of the Konica Minolta’s AccurioJet KM-1 digital inkjet press system through of sales partners decreased, while those sold through direct sales remained at the same level year on year.

Sales of label printers and digital decoration equipment continued to maintain the highest market share in the targeted markets; however, the sales volume decreased, as some sales have been delayed into the next quarterly period.

In the marketing services business unit, despite the continuing efforts into transition as a business that provides high value-added solutions, sales fell mainly in Europe, leading to a decrease in revenue overall.

As a result, the Professional Print Business segment recorded revenue of ¥50.6 billion yen, a decrease of 5.2 percent year-over-year, and operating profit of 1.0 billion yen, a decrease of 37.2 percent year-over-year.

Full-Year Forecast

Konica Minolta lowered its full-year forecasts for revenue, profits, and earnings per share (EPS). It lowered it revenue forecast by 3.1 percent to ¥1,085.0 billion; its profits forecast by 8.0 percent to ¥37.5 billion; and its EPS forecast from ¥91.18 to 75.80.

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