Challenging First Half for Konica Minolta, Slashes Forecast

Along with several other Japanese OEMs, Konica Minolta of Japan reported less profitable results for the first half of its fiscal year, the six months ending on September 30, 2019. T

On November 1st, the company reported revenues of ¥497.4 billion, a 3.8 percent year-over-year decline. Operating profit fell to ¥5.4 billion, an 84.3 percent year-over-year-decline (however, the company noted that during the previous period, it had recorded a temporary gain of ¥14.9 billion derived through sale and leaseback arrangements). Profits totaled ¥0.1 billion, a 99.5 percent year-over-year decline.

Konica Minolta said a stronger yen versus the Euro, U.S.-China trade fiction, and a slowing Chinese economy led to declining revenues for its  Office Business and Professional Print businesses.

Office Business Group

Konica MInolta’s Office Business group reported revenue of ¥273.2 billion, a 6.0 percent year-over-year decline, and operating profit of ¥17.1 billion, a 24.5 percent year-over-year decline.

Sales for both color and monochrome A3 MFPs was down year-over-year.

Konica Minolta noted it introduced new color lower-speed MFPs, the bizhub i-series, which features a new engine design for the first time for seven years. However, it said that switching from old models to these models has taken some time, and “overall sales has been postponed to the nine-month period ending December 31, 2019.”

To date, sales of Konica MInolta’s Workplace Hub MFPs have been extended to 17 cities in North America, and 21 countries throughout the world.

The company also alluded to a pending subscription-based model that it’s developing.

Professional Print Group

The company’s Professional Print group reported revenue of ¥103.2 billion, a 5.4 percent year-over-year decline, and operating profit of ¥2.0 billion, a 61.4 percent year-over-year decline.

Sales of both color and monochrome models declined year-over-year.

Sales for the AccurioJet KM-1 through partners declined year-over-year, while sales sold directly “significantly increased.”

Sales of label printers and digital-decorating equipment showed “substantial growth” in the latter half of the six-month period. Sales of color production models also “significantly” increased in Association of Southeast Nations (ASEAN).

Industrial Business

This business reported revenue of ¥56.0 billion, a 6.0 percent year-over-year decline, and operating profit of ¥9.7 billion, a 15.2 percent year-over-year decline.

Healthcare Group

This business reported revenues of ¥45.0 billion, a 12 percent year-over-year increase, and operating profit of ¥0.3 billion, a 53.6 percent year-over-year decline.

Others Group

This group reported revenue of ¥19.8 billion, a year-over-year increase of 15.2 percent, but an operating profit loss of ¥23.8 billion.

Second Quarter

For the three months that ended on September 30, 2019, Konica Minolta reported ¥255.7 billion of revenue, down 2.3 percent year-over-year; operating profit of ¥4.8 billion, down 74.5 percent year-over-year; and profits totaling ¥1.3 billion, down 89.2 percent year-over-year.

The Office Business group reported revenues of ¥138.6 billion, down 5.8 percent year-over-year, and operating profit of  ¥9.4 billion down 29.7 year-over-year. The Professional Print business reported revenues of ¥52.6 billion, down 5.7 percent year-over-year, and operating profit of ¥1.0 billion, down 72.2 percent year-over-year.

Forecast

Konica Minolta significantly reduced its outlook for its fiscal year that will end in March 2020, forecasting:

  • Revenues of ¥1,045.0 billion, versus ¥1,059.1 for its previous fiscal year, and down 3.7 percent versus its previous forecast.
  • Operating profit of ¥20.0 billion, versus ¥62.4 billion for its previous fiscal year, and down 66.7 percent versus its previous forecast.
  • Profits of ¥7.5 billion, versus ¥41.7 billion for its previous fiscal year, and down 80 percent versus its previous fiscal year.

Production Shift to Malaysia

Noting that on September 1, 2019,  United States  implemented a 15-percent tariff on copier/MFPs made in China, Konica Minolta stated that it had shifted production of its these office products from China to Malaysia, presumably to avoid the tariff.

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