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Konica Minolta: A bump in the 2019 profits road

November 1, 2019

Revenues down four percent, but profits fall through the floor, down 84 percent.

Konica Minolta announced its consolidated financial results for the second quarter of fiscal year 2019, the period of three months 1 July 2019 to 30 September 2019 and half year results for the six months period of 1 April 2019 to 30 September 2019.

The US-China trade frictions, slowdown in the Chinese economy and a continuing sense of uncertainty about the European economy, including the prolonged Brexit negotiations, have caused the yen to strengthen, constraints on customers’ investments, a protracted cycle of sales negotiations and other factors influenced revenues for Konica Minolta.

Revenues for the office printing segment in the first half of fiscal year 2019 was down six percent year-on-year at ¥273.2 billion ($38.8 billion/ €34.8 billion). Konica Minolta stated this was influenced by changes in customer procurement behaviour accompanying economic slowdown, markets contracted more than expected not only in Europe and China, but also in the US. Competitiveness of A3 colour products declined in the US and priority given to supply and quality resulted in delay of cost reduction in new colour products. Reduction in non-hard sales occurred within anticipated range, Konica Minolta added.

Konica Minolta’s Workplace Hub (WPH) sales region has grown to 21 countries and 17 cities in North America. Driven by Europe, pipeline and customer numbers are growing, but in the US, business development is taking time, and customer acquisition plans are delayed. Innovation of the business model dealing with DX on a monthly subscription fee model is making progress, and average customer unit prices are also meeting or exceeding planned targets.

In its forecast, Konica Minolta states that it is looking at expansion of sales of new colour products during the second half of the year and recovery from slowdown through cost reduction, introduction of new products and strengthening its colour segment. Effects will emerge in the fourth quarter.

Revenue forecasts were adjusted downward ¥40 billion ($568 million/ €510 million) for the full fiscal year, taking into consideration a continued strong yen. Annual dividend predictions stay unchanged.

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