Difficult First Half for Epson, But Improving Second Quarter

On October 30th, Seiko Epson of Japan released results for its second quarter that ended on September 30, 2019.

Revenue for the second quarter was ¥266.4 billion, down 5.5 percent year-over-year, while profit was ¥14.6 billion, up 1.8 percent year-over-year. Earnings per share for the quarter were ¥107.31, versus ¥111.46 for the second quarter a year earlier.

Epson says its lower revenue was due to its strength against currencies such as the euro, Indian renminbi, and Latin American currencies.

Also contributing to lower revenue were lower sales of projectors, microdevices, robots, etc. This however was offset by expanded sales of Epson high-capacity ink-tank inkjet printers and shared office printers, so that business profit increased year-over-year.

Epson also reported a decline in sales of ink-cartridge printers, and the containment of fixed costs.

Revenue was flat for Epson’s Printing Solutions group year-over-year, but was slightly down for its Wearable and Industrial Products group and Visual Communications group. Business profit was also down for these two groups, but was up 2.3 percent for its Printing Solutions group.

In its Printing Solutions group, Epson reported that for the second quarter:

  • Epson SOHO and home ink-cartridge printer sales decreased, as
    did ink sales.
  • Epson high-capacity ink tank printer unit shipments increased in
    both emerging and developed economies.
  • Sales of Epson office shared inkjet printers steadily expanded.
  • In its professional printing sub-group, commercial and industrial inkjet printer demand was firm in both priority and existing areas.
  • For its point-of-sale (POS) printers, Epson won key contracts in Italy and Japan.

First Six Months of Fiscal Year

Epson also released results for the six months of its fiscal year, the six months ending on September 30, 2019.

For the six-month period, Epson reported revenues of ¥516.1 billion, down 3.1 percent year-over-year. Profits were ¥12.2 billion, down 39.3 percent year-over-year. Comprehensive income for the period was  ¥4.6 billion, down 86.3 percent percent year-over-year. Earnings per share were ¥35.14, versus ¥57.38 for the same period a year earlier.

Slashes Forecast

Epson also slashed its forecast for its fiscal year that will end in March 2020. It’s now projecting revenue to be down 6.2 percent from its previous forecast, and profits down 40 percent versus its previous forecast to ¥27.0 billion.

Epson’s says it was influenced by a greater than anticipated decline in the Chinese and Indian economies, and the impact of China-United States trade friction on investment and other factors in the United States and Europe.

It forecasts that its high-capacity ink-tank inkjet printers will achieve its initial sales target (approximately 10.2 million units) in emerging markets and in developed economies such as the United States and Europe. However, it says this is counterbalanced by the sudden decline in the  foreign exchange situation and economic conditions, and lower than expected results in the company overall, especially in projectors and robots.

Epson Strategy

Epson laid-out an interesting strategy: continue promoting high-capacity ink tank printer promotions in developed economies (primarily the United States and Europe)

It will be also seeking to expand its shared office inkjet-printer sales and sales of its commercial and industrial office inkjet-printer.

Last but not least, it will “Lay the groundwork to make robots a core business.”

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