May 14, 2020
Konica Minolta, Inc. announced revisions of the forecasts for its consolidated financial results for the fiscal year ended 31 March 2020 (from 1 April 2019 to 31 March 2020), initially announced on 1 November 2019, as well as dividends for the same fiscal year.
Revenue forecasts have been revised down from ¥1,045 billion to ¥995 billion, a 4.8% decrease. Konica Minolta said that sales from the Company’s main businesses through the end of February performed relatively well as forecasted, excluding China. In March, as the COVID-19 pandemic spread across geographies, the Company saw a dive in sales of main products and services, which impacted both revenue and operating profit.
Konica Minolta explained the impact of COVID-19 outbreak on the Company’s financial results, which is certainly the largest factor taken into the Company’s revision of forecasts, is based on the following circumstances:
The Company runs its business globally with revenue in regions other than Japan constituting more than 80% of the total revenue. Amid the business environment, as the outbreak of COVID-19 since late January 2020 continues to spread across the world, the Company is seeing disruptions or deterioration in activities of its supply chains and value chains, which are expected to negatively impact the Company’s business.
As for preventive measures against the spread of COVID-19 infections, governments have mandated or requested that factories and offices should shut down or scale down operations in China from late January, and also in Asia, Europe and the United States from mid-March. That said, from the perspective of the Company’s supply side, the Company experienced a tentative issue on component procurement and finished goods production in China and Malaysia. As for the demand side, instalment of equipment and marketing activities were impacted as customers held down or delayed their capital spending or the Company was having a hard time physically visiting customers.
Looking at the ‘Office Business’, Konica Minolta said that for production, minimal effect is expected on the Company’s supply in the current fiscal year, despite the fact that two factories in China (in Jiangsu Wuxi and Guangdong Dongguan) shut down their operations from 19 January 2020 to 10 February 2020 and one in Malaysia (Malacca) from 18 March 2020 to 15 April 2020. Further, a factory in France, which mainly produces toner filling, was closed from 18 March 2020 to 8 April 2020.
However, no effect from the closure is expected on the Company’s supply, given that the decrease of the factory’s production during the closure was successfully covered by production in Japanese factories. As for sales, China gradually resumed marketing activities from the latter half of February, although not yet in a full-scale restart in March. Furthermore, sales activities were restricted in countries other than China due to measures of lockdowns and declarations of a state of emergency taken through the month of March, which mainly hit direct sales and mid- to small-sized dealers significantly for their new sales orders and instalment of equipment. As a state of emergency was declared in April in Japan, accounting for approximately 15% of the total Office Business, minimal effect due to COVID-19 was seen in March.
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