The COVID-19 pandemic has had a dramatic effect on Japanese copier manufacturers fiscal year results.
The impact of COVID-19 was evident in the recently released financial statements by Konica Minolta, Kyocera, Ricoh, and Toshiba Tec whose fiscal years ended on March 31, 2020, and who announced their results between late April and late May. (Canon’s fiscal year ends Dec. 31, 2020, and I was unable to get financial information about Sharp’s MFP business. See note below.) From the numbers, the performance of each of these copier manufacturers has been greatly affected by COVID-19, especially coming into the new fiscal year which began in April. While COVID-19 only impacted the fourth quarter (January to March), and in most instances only March, its impact was significant.
The damage that COVID-19 has inflicted on each company in this short period is about 178 billion yen (US$1.7 billion) in sales and about 36 billion yen (US$334 million) in operating income for Sharp; about 23 billion yen (US$213 million) in sales and about 15.6 billion yen (US$145 million) in operating income for Ricoh; about 23 billion yen (US$214 million) in sales and about 11 billion yen (US$102 million) in operating profit for Konica Minolta; and about 13 billion yen (US$121 million) in sales and about 5 billion yen (US$46 million) in operating profit for Toshiba TEC.
During the past fiscal year, Japanese copier manufacturers were also affected by the Japanese yen’s appreciation and the euro’s depreciation due to the high export ratio. Because these companies’ manufacturing bases are in China, the increase in tariffs on China in the United States also had an effect. The impact of each depends on the circumstances of the individual company, but as a result, Sharp and Konica Minolta posted losses in operating profit in the fourth quarter, while Kyocera and Toshiba TEC fell in operating profit by 84% year-over-year.
In addition to the financial impact of COVID-19, the effects of foreign currency exchange resulted in a decrease in sales of 32.9 billion yen and operating income of 7.1 billion yen. In the core office business, sales were 546.4 billion yen (-7.0% year-over-year) of which the impact of COVID-19 was more than 10 billion yen. Operating income was 23.8 billion yen (-49.4% year-over-year) with a COVID-19 impact of about 5 billion yen. Looking at the fourth quarter, sales were down 11%, and operating income down 90% compared to the same period last year.
Kyocera has not disclosed the financial losses attributed to COVID-19, but in its document solution business, sales were 359.9 billion yen (-4.1% year-over-year and -8.8% for the fourth quarter). Operating income fell to 34.4 billion yen (-20.8% year-over-year) for a full year and almost halved to -48% in the fourth quarter.
Ricoh reported office printing business sales of 1,062.0 billion yen (-7.4% year-over-year) and operating income of 90.3 billion yen (-23.4% year-over-year). These figures were impacted by exchange rates of 7 billion yen, the tariff increase on China in the U.S. of 2.5 billion yen, and the impact from COVID-19 of 10.4 billion yen. In Ricoh’s office printing business, A3 color MFP sales increased by about 3% from the same period the previous year until the third quarter. After March, sales decreased due to the pandemic. Hardware sales were -2% for the full year and -8% for the fourth quarter alone. MFP sales were up 4% year-over-year in January and February but fell 18% in March as COVID-19 began to have a full-fledged impact. Regarding non-hardware, profit decreased by approximately 4 billion yen quarterly due to decreased MIF. Print volume decreased further in March because of lockdowns in each region and reduced economic activity. As a result, non-hardware sales declined 7% for the full year and 10% in the fourth quarter.
Toshiba TEC’s Printing Solutions business had sales of 179.8 billion yen, a 7% decrease from the previous year, of which COVID-19 had an impact of about 7.5 billion yen. Operating income in the printing solutions business was positive (2.7 billion yen) until the third quarter, despite the significant negative impact of exchange rates. The company reported a 300 million yen loss for the full year with the impact of COVID-19, causing a loss of 3 billion yen in the fourth quarter.
Only two companies—Konica Minolta and Toshiba TEC—disclosed their financial outlook on the impact of COVID-19 on the new fiscal year. Toshiba TEC’s calculation forecasts about 70 billion yen in sales and about 27 billion yen in operating profit. Konica Minolta forecasts 40 billion to 50 billion yen in operating income. However, no one knows how the second and third waves of COVID-19, even if only temporary, will affect the future.
This uncertain situation will continue until an effective vaccine for COVID-19 is available. In addition, the work style that has rapidly progressed from office work to telework will likely remain. Because of this, MFP’s installed in offices will need to function more as a hub to leverage cloud services.
Sales in the office services business, which Ricoh is focusing on, were strong during its most recent fiscal year at 586.9 billion yen (+18.2% year-over-year). Operating income almost doubled to 29 billion yen (+97.3% year-over-year). Ricoh will continue to focus on the office services business from this fiscal year on.
Konica Minolta also anticipates expanded sales opportunities driven by solutions that enable remote collaboration while providing strong information security for their major clients, such as small and medium-sized enterprises and government offices. These IT service solutions and Konica Minolta’s Workplace Hub will support new work styles such as working from home.
*When Sharp was in a management crisis, they tried to hide the decline of the MFP business by including the digital signage business with it. After Sharp was acquired by Foxconn, the MFP business was integrated with Sharp’s 8K ecosystem segment, which includes various businesses such as LCD color TVs, and Blu-ray disc recorders. Because of this, it is impossible to track Sharp’s MFP sales. However, 8K ecosystem segment sales to external customers were 1,131.3 billion yen for the year ending March 31, 2020, which decreased from 1,287.8 billion yen the previous year.
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