Kyocera’s growth driven by document demand
October 30, 2024
A weaker yen boosts revenue, but rising costs and weak components business weigh on profits.
Kyocera has posted a modest increase in half-year revenue driven largely by the Document Solutions segment and currency gains from the weakening yen. However, mounting labour and operational costs, along with weaker-than-expected demand in key components, have put pressure on profits, prompting a downward revision in the full-year outlook.
For the six months to the end of September, Kyocera reported sales revenue of ¥998.6 billion ($6.7 billion/ €6.4 billion), up 1.3% from the same period last year. This growth was primarily fuelled by the Document Solutions Unit, which saw a revenue surge of 9.1% as demand for printer and document management products expanded globally. The segment’s success was a highlight in Kyocera’s Solutions Business, which also benefited from cost efficiencies and expanded sales networks.
The company’s profit before tax, however, declined by a striking 33.5% to ¥51.8 billion ($349 million/ €333 million), with the Core Components and Electronic Components units contributing heavily to the shortfall. The fall was attributed to reduced orders for organic packages and boards, which are critical in semiconductors. The company’s subsidiary, Kyocera AVX, faced increased operating costs, compounded by a lower utilisation rate and delays in achieving profitability targets.
Kyocera’s President, Hideo Tanimoto, announced a revision of the full-year outlook due to slower-than-anticipated demand recovery. The company now forecasts annual operating profit at ¥68 billion ($459 million/ €437 million), down from an initial projection of ¥110 billion ($742 million/ €707 million), while revenue expectations were adjusted to ¥2.02 trillion ($13.6 billion/ €13 billion) from a previous target of ¥2.05 trillion ($13.8 billion/ €13.2 billion). This shift reflects both industry-wide challenges and the pressure of sustaining competitive operating costs amid rising global prices.
Despite challenges in components, Kyocera continues to see opportunities for growth within the Document Solutions Unit. The division’s strong performance is largely attributed to its expanding base of corporate customers seeking to streamline print and document management needs, along with Kyocera’s focus on integrating hardware and software solutions. This segment is set to remain a cornerstone of Kyocera’s medium-term strategy, with further investments planned to expand product offerings and drive market penetration.
Kyocera’s recent restructuring in other business segments highlights its intent to hone in on high-growth, high-margin areas. The company’s new roadmap involves scaling back lower-performing sectors and divesting from non-core operations, aiming to reinvest proceeds into core operations and bolster R&D in areas such as AI-specific components.
The yen’s depreciation has offered Kyocera some relief on the global front, making Japanese exports more competitive. However, exchange rate gains may be insufficient to counteract rising material and labour costs over the coming quarters.
As Kyocera adapts to shifting demands, the Document Solutions Unit emerges as a key growth driver amid challenging global conditions, underscoring the company’s reliance on optimising its core, profitable businesses while curtailing exposure in more volatile segments.
Categories : City News
