Konica Minolta revenue up despite losses
November 5, 2024
Revenue climbs 5.6% year-on-year; restructuring costs impact overall profitability amid mixed regional performance.
Konica Minolta CEO Toshimitsu Taiko reported a 5.6% increase in revenue for the first half of 2024, reaching ¥583.7 billion ($3.9 billion/€3.7 billion), driven by yen depreciation and strong sales in digital printing solutions. Despite this gain, the company recorded a ¥10 billion ($67 million/€63 million) loss before tax and a ¥0.7 billion ($4.7 million/€4.4 million) operating loss, attributed to restructuring costs as it navigates global challenges in its core business units.
The first-half performance was marked by contrasting results across segments, notably in the Digital Workplace and Professional Print divisions, which outperformed expectations, while the Imaging Solutions division lagged due to declining radiography sales in key markets.
The Professional Print division was a standout performer, with revenue up 12.1% year-on-year to ¥139 billion ($930 million/€880 million). This growth stemmed largely from increased demand for high-speed production printers and an expanding footprint in digital printing, particularly in the U.S. and India. Heavy Production Print (HPP) models saw significant gains, with unit sales surging 137%, while the industrial print subsegment also registered robust demand across inkjet digital, label, and textile printing solutions. The division’s business contribution profit increased nearly 80% to ¥6.5 billion ($43 million/€41 million), supporting a 34.4% rise in operating profit to ¥4.9 billion ($33 million/€31 million).
The Digital Workplace division also contributed positively to revenue growth, seeing a 4.5% rise to ¥307.6 billion ($2.1 billion/€1.9 billion), with the division’s business contribution profit up by 78.1% to ¥19.1 billion ($128 million/€121 million). The segment benefited from increased A3 MFP hardware sales, especially monochrome models, and saw an uptick in non-hardware revenue, including consumables and IT services. However, one-off expenses related to global restructuring and the closure of Konica Minolta’s Chinese manufacturing subsidiary led to a 34.4% decline in operating profit, leaving the division at ¥6.5 billion ($43 million/€41 million).
Regional performance was mixed, with revenue rising in Asia, notably India, while the U.S., Japan, and China saw decreases in their respective contributions. Konica Minolta attributed this mixed outcome partly to economic pressures in China and varied demand for its hardware and services.
As part of its strategic review, Konica Minolta classified its Precision Medicine business as a discontinued operation, having divested subsidiary Invicro, LLC and planning to transfer Ambry Genetics to Tempus AI, Inc. by 2025. The business recorded ¥25.8 billion ($173 million/€163 million) in revenue, up 8.8% from the previous year, thanks to a surge in genetic testing demand, primarily in the U.S. However, restructuring efforts in this and other units accounted for ¥16.4 billion ($110 million/€104 million) in additional costs, impacting the overall financial picture.
Looking ahead, Konica Minolta has revised its full-year revenue forecast slightly downward to ¥1.13 trillion ($7.6 billion/€7.1 billion) due to the Precision Medicine divestitures. It expects business contribution profit to reach ¥42 billion ($283 million/€266 million), with an operating loss of ¥14 billion ($94 million/€89 million) due to ongoing restructuring. Exchange rates remain critical to future performance, with the yen projected at 140 to the dollar and 150 to the euro.
Free cash flow saw notable improvement, rising to ¥16.7 billion ($112 million/€106 million), reflecting prudent cash management and reduced investment outflows. This positive cash position, coupled with a solid revenue trajectory in core areas, offers a cautiously optimistic outlook for shareholders, despite ongoing operational realignments.
Our take: Konica Minolta’s grand restructuring vision may be all about securing long-term stability, but it is hard to ignore the irony of those short-term losses. After all, stability does not come cheap, does it? Meanwhile, it is fascinating to see a boost in sales for those monochrome A3 MFPs. Who knew black-and-white was the new black? And one cannot help but wonder — which competitors are watching their market share turn grayscale?
Categories : City News
Tags : Earnings Financials H12024 Japan Konica Minolta OEM
