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Impairment Loss for Brother, But Strong Growth for Print Business

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Brother International of Japan today reported financial results for its fourth quarter and full fiscal year, with both ending on March 31, 2024.

In a nutshell, results would have been better if in the fourth quarter, the company had not taken an impairment loss for goodwill for its Domino business, recording an impairment loss of ¥28.2 billion ($181.22 million). (According to Investopedia, goodwill impairment occurs when a company pays more than book value for an acquisition, and then the value of that acquisition declines. The difference between the amount that the company paid for the acquisition and the book value for it is known as goodwill. Domino is an industrial-printer business that Brother acquired in 2015.)

On the plus side, there was also good news for Brother’s Printing and Solutions business, which, despite challenging market conditions, posted very strong financial results for the quarter and year.

Fourth Quarter

Brother’s fourth-quarter net sales were ¥210.2 billion ($1.35 billion), up 4.1 percent year-over-year; operating profit was a loss of ¥11.3 billion ($72.61 million); and net income was a loss of ¥15 billion ($96.38 million). Printing and Solutions’ net sales were up 6.85 percent year-over-year, and operating profit was up 68.34 percent year-over-year.

Full year

Brother’s full-year net sales were ¥822.9 billion ($5.28 billion), up 0.9 percent year-over-year; operating profit was ¥49.8 billion ($320.03 million), down 10.1 percent year-over-year; and net income was ¥31.6 billion ($203.07 million), down 19.0 percent year-over-year.

Brother said sales revenue was flat year-over-year due to positive foreign-currency exchange-rate effects, despite the impact of sluggish market conditions in China and Asia for its Machinery business, lower hardware sales in the Printing and Solutions business, etc. It also noted that operating profit decreased due to its Domino impairment loss.

Full-year net sales for Brother’s Printing and Solutions business were ¥514.92 billion ($3.30 billion), up 3.5 percent year-over-year, and operating profit was ¥61.01 billion ($392.07 million), up 42 percent year-over-year.

Brother said profit for the Printing and Solutions business increased substantially due to lower logistics costs, an increase in gross profit resulting from sales of consumables for communications and printing equipment, and positive price adjustment effects, despite higher sales promotion and selling, general, and administrative costs..

Forecast

For its current fiscal year that will end on March 31, 2025, Brother is forecasting sales revenue of ¥880 billion ($5.65 billion), up 6.9 percent year-over-year; operating profit of ¥88 billion ($565.81 million), up 76.7 percent year-over-year; and net income of ¥63 billion ($405.04 million), up 99.1 percent year-over-year

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