Most major OEMs of the print and imaging industry have released financial results for the first calendar quarter of 2023. Results are from the January through March period. (HP has its January through March earnings review scheduled for May 30 and this report will be updated with HP information when it releases results). The analyses and summaries below reflect this first calendar quarter’s financial performance regardless of the type of fiscal year calendar the reporting companies may use.
First quarter 2023 results were released by Canon on April 26.
Canon’s consolidated sales revenue and operating profit for the first quarter of 2023 were both up more than 10% in yen valuation over the same period as last year. However, with a continued weakened yen, these translated to more than 2% declines in USD dollar value over last year. The company said new businesses are showing greater growth potential, with all four new businesses, including network cameras, growing at double-digit rates. Existing businesses in cameras and office MFDs also posted sales increases even though market growth was modest.
The results for the Printing business unit, covering office, prosumer (laser printers & business inkjet) and production printers, were as follows:
Canon’s Printing Business Unit reported a 10% net sales revenue growth in yen valuation in the first quarter of 2023 over the same period as last year (a 3.3% decline in USD dollar valuation). Office MFD yen revenue increased by 20% and Production printer yen revenue was up 19%. However, these were offset by a 1% decrease in the prosumer (laser print, inkjet) yen sale revenue. According to Canon, this decrease was due to the surge in at home printing during the pandemic subsiding. Canon noted that production print posted its eighth consecutive quarter of year-on-year sales growth. Operating profit for the printing business unit was down 3% in yen value (14.8% translated to USD dollar value). The company cited weak consumable sales in the office and prosumer segments.
Despite uncertainty in the global economy from the second quarter onward, Canon is optimistic about its business performance in 2023. The company expects to continue to experience strong demand for its products and services, including office printing, inkjet printing, digital interchangeable lens cameras, network cameras, professional video production equipment, medical equipment, and semiconductor lithography equipment. Canon revised its full-year consolidated sales and operating profit forecasts upward to net sales of ¥4,313.0 billion and operating profit of ¥380.0 billion; year-on-year increases of 7.0% and 7.5% respectively. The Printing Business unit is forecast to grow by 4.3% over 2022 with Office growing 8.1%, Prosumer a more modest 0.8%, and Production growth of 4.3%.
On May 30, HP released its January through March 2023 quarterly earnings report.
Consolidated Quarterly results for Personal Systems (computers and peripherals) and Printing:
For the first quarter of the year (second quarter of HPs fiscal year), consolidated revenue results for HP showed a 22% decline when compared to the same quarter last year. This is the fourth quarter in a row that HP has reported year over year consolidated revenue declines. Consolidated operating income was also down by 24% over the same period as last year. In the Personal Systems (computers and peripherals) business, total unit sales were down 28% (Consumer PS units were down 34% while Commercial PS units were down by 23%). Personal Systems revenue was $8.2 billion, 29% lower than a year ago (Consumer PS revenue was 24% lower and Commercial PS revenue was down 24%).
Results for the Printing business segment:
Revenue and operating income in HP’s printing business also showed declines from the same period as last year. A highlight for the company was that while Commercial Printing unit sales were flat Commercial Printing net revenue was up 5% over the same quarter as last year. However, this was offset by Consumer Print unit sales being down 5% (resulting in a Consumer Print net revenue decline of 19%), and Supplies net revenue declining 4% when compared to the same quarter as last year. HP touted its “rigorous cost management” and “solid strategic execution” in delivering a 19% operating profit margin in its Printing business for the quarter. The Printing business segment represented 37% of all company revenue and 67% of company operating income this quarter, compared to 30% and 55%, respectively, in the 2022 January to March quarter.
For the just completed quarter HP reported GAAP diluted net EPS of $1.07 and Non-GAAP diluted net EPS of $0.80. For the next quarter the company is estimating GAAP diluted net EPS to be in the range of $0.61 to $0.71 and non-GAAP diluted net EPS to be in the range of $0.81 to $0.91.
Konica Minolta reported its results for the January through March 2023 calendar on May 15.
For the calendar quarter of January through March 2023, Konica Minolta’s consolidated figures showed growth in yen value of almost 24% in net sales revenue over the same period of 2022 (almost 9% growth in USD dollar value). While the company showed a consolidated operating profit loss for the quarter, this was due to its taking a total of 116.6 billion yen in impairment losses of goodwill in the Healthcare Business and the imaging loT solutions unit of the Industry Business.
This calendar quarter was the end of Konica Minolta’s fiscal year 2022 and it reported the end of fiscal year financial performance. Overall the company performed well. For the fiscal year, consolidated net sales were up 24% from the preceding fiscal year, in yen valuation. All business segments showed 25%-30% revenue growth except for the Industry Business segment, which declined 1% from the previous fiscal year. The final operating profit was shown as a loss as it was impacted by the impairment losses taken by the company in its fiscal fourth quarter. These impairment losses were a result of re-evaluating investments in its Ambry Genetics and MOBOTIX acquisitions. Konica Minolta reported that without these impairment losses, fiscal year 2022 operating profit would have been 21.5 billion yen, exceeding its forecast of 15.0 billion yen.
Results for the related business to the print industry – Digital Workplace Business and Professional Print Business:
In the print-related business segments of Digital Workplace and Professional Print, Konica Minolta showed growth of 24% net sale revenue based on yen value (9.4% USD dollar value) during the January through March 2023 quarter as compared to the same period in the last year. Operating profit grew a whopping 300% in yen value, or more than 250% in USD value.
For its fiscal year, Konica Minolta reported a 29% increase in sales revenue based on yen values in the Digital Workplace business and a 30% increase in the Professional Print business compared to the fiscal year 2021 results. The Digital Workplace operating profit was 9.2 billion yen compared to an operating loss in the previous year, while Professional Print grew its fiscal year operating profit to 16.6 billion yen over the 1.0 billion yen operating profit from the fiscal year 2021. Overall, both the Digital Workplace and Professional Print Business were the strong performers for Konica Minolta due to increased A3 MFPs, growing managed IT service business, growth in production print unit sales, growth in sales of industrial print units that include AccurioJET KM-1e, and higher consumable revenue in all areas of general commercial press, label press, embellishment press, and textile press.
On a consolidated basis, for fiscal year 2023 (ending March 2024), Konica Minolta forecast its sales revenue to increase by 1%. In the Digital Workplace business, it is forecasting a decline of 2%, while the Professional Print business is forecast to grow by 1%. As to operating profit, the company forecasts a positive 18 billion yen for the fiscal year. Konica Minolta stated that the company will focus on strengthening businesses in its Industry Business, Professional Print Business, and Healthcare Business segments while protecting its profit businesses in the Digital Workplace Business segment. Cost cutting through structural reforms and cross-company reorganization are also forecast. In its new medium-term business plan, Konica Minolta says it will strive to achieve a return on ROE of 5%.
On May 15 Kyocera reported results for January through March 2023, and results for its fiscal year 2023.
For the calendar quarter of January through March 2023, Kyocera showed net sales revenue in yen value growing 3.2% over the same period from last year. This translates to a decline of 9.3% in US dollar value. Consolidated operating profit for the period comparison was down more than 50% in yen value which translates to more than 57% in US dollar value.
This calendar quarter was also the end of Kyocera’s fiscal year 2023. For the fiscal year, the company reported consolidated sales revenue increased by 10.1% in yen value, but consolidated operating profit decreased by 13.7% from the previous fiscal year. Kyocera noted it achieved its long-stated target of 2 trillion yen in sales revenue primarily due to increased sales by the Document Solutions Unit and the Industrial Tools Unit, as well as the impact of the weaker yen. The main reasons cited for the decrease in profit were increased raw material costs, a sharp decrease in mobile phone sales volume within the Communications Unit, and three one-time costs totaling approximately 19 billion yen.
Document Solutions Unit results (Printers and MFPs make up this business unit):
In the Document Solution Unit of Kyocera, net sales in yen value for the calendar quarter increased almost 21% over the same time as last year. This translates to a 6% USD dollar value increase. Operating profit in this unit increased by 46% in yen value or 28% in USD dollar value.
For the fiscal year ending March 31, 2023, Kyocera reported Document Solutions yen valued sales revenue increased by 18.6% over the fiscal year 2022, contributing 21.5% of consolidated revenue. Operating profit in this unit increased by 1.1% and contributed 7.8% of consolidated operating profit. The company noted increased sales of its major products in this unit including inkjet printers and copiers.
Kyocera is forecasting consolidated revenue growth of 3.7% over the fiscal year 2023 and 14.4% growth in its consolidated operating profit for the fiscal year. In the Document Solutions Unit, the company is forecasting a 4.6% revenue growth and an 18.7% growth in operating profit for this unit.
On May 8, Ricoh released its January through March (Ricoh’s fourth quarter FY2022).
The first calendar quarter of 2023 was the final quarter of Ricoh’s fiscal year 2022. For this just-finished quarter, the company reported significant increases in consolidated net sales revenue and operating profit in both yen and US dollar valuations. Sales revenue was up 25.5% in yen value translating to an increase of more than 10% in US dollar value for the same quarter as last year. Operating profit was up by 173% in yen value or almost 140% in US dollar value.
For Ricoh’s fiscal year 2022, the company reported a consolidated sales increase of 21% fiscal year over fiscal year to ¥2,134.1 billion and an operating profit of ¥78.7 billion, which was 97% higher than the previous year. Ricoh attributed this fiscal year’s performance to the office printing business experiencing improved supply toward the end of the term, commercial hardware and non-hardware sales recovering, and the office services business growing more than 21% during the year.
Combined results for Digital Services, Digital Products, and Graphic Communications (print industry-related business segments):
The print industry-related businesses contributed approximately 88% of Ricoh’s consolidated financial results in the first calendar quarter of the year. For this most recent quarter, Ricoh reported a 19.4% increase in net sales yen value over the same period as last year (almost a 5% increase in US dollar value). Operating profit grew 42.8% in yen value (25.5% in USD dollar value) over the same quarter of last year.
Ricoh reported increases in each of these businesses during its fiscal year 2022. Digital Services increased by 15.6% fiscal year over fiscal year, driven by strong growth in the office services business despite non-hardware sales recovery at a more moderate pace than anticipated. Digital Products sales rose by 9.1% and Graphic Communications sales increased by 25.5% (both in yen valuation). Graphic Communication includes the commercial printing business, which increased due to the recovery of the economies in Europe and the United States and sales of non-hardware recovered to pre-pandemic levels.
Ricoh provided an outlook for consolidated business for its fiscal year 2023 (ending March 31, 2024) that forecasts a sales revenue increase of 5.4% over the just-completed fiscal year. While remaining profitable, the company does forecast that operating profit will be 11% lower than this past year.
Ricoh’s 21st Mid-Term Management Strategy began in April 2023. The strategy continues to aim at transforming Ricoh into a digital services company. The strategy has three main pillars:
- Accelerating the transformation from an earnings structure focused on the office printing business to a digital services company
- Build flexible production and supply systems
- Raise its capacity to tackle changes in the business environment
Xerox released its first quarter 2023 results on April 25:
Xerox reported net sales revenue growing almost 3% over the same period as last year. Operating profit was positive as compared to an operating loss during the same time last year. Making up this overall performance, equipment sales revenue was up 24.5% but was offset with performances in service and maintenance, supplies, and financing revenue (which made up 77% of total revenue) with declines of 1.9%, 3.6%, and 1.9%, respectively. Xerox stated that it is seeing continued strength in its office print business, particularly for state and local government, education, and mid-market accounts.
Xerox announced on April 24, 2023, that it was donating its PARC subsidiary to SRI International, a nonprofit research institute. According to the announcement, the donation will allow Xerox to focus on its core businesses and PARC to reach its full potential. PARC is known for developing technologies including the laser printer, the graphical user interface, and Ethernet. SRI is a leading research institute with a strong track record of innovation. Xerox will retain the majority of PARC’s patents and grant SRI a perpetual license to use them; Xerox has the option to continue receiving certain research services from SRI. Expected to be completed by the end of May, it is not expected to have a material impact on Xerox’s earnings or cash flow.
Xerox provided the following outlook for 2023:
- Revenue growth: flat to down low-single-digits in constant currency
- Adjusted Operating Margin: 5.0% to 5.5%
- Free cash flow: at least $500 million
On April 28, Epson released its quarterly results (its fourth quarter FY2022 results).
Epson noted that supply chain issues have nearly come to an end, with the availability of semiconductors and most other parts improving dramatically. That brought on a 19.0% increase in quarterly net sales revenue in yen (4.6% when converted to USD) and a 13.5% increase in yen (virtually flat in USD due to the weakness of the yen) in operating profit when compared to the same quarter as last year. For Epson’s fiscal year yen revenue was up 17.8% compared to the previous fiscal year and business profit was up 6.1% (in yen).
Office & Home and Commercial & Industrial Printing segments (Printing Solutions):
Printing continued to be 70%+ of consolidated Epson revenue.
In the Printing Solutions segment, quarterly net sales in yen currency were up 20.7% or 6.0% when converted to USD $ when compared to the same period last year. Quarterly operating profit in yen currency grew by 8.3%. However, due to the continuing weakness of the yen, this converts to an almost 5% decline in USD $ value.
For its fiscal year, Epson saw revenue increase in the Office & Home Printing segment, but profit decreased. Several factors contributed to the fiscal year revenue growth. These include a 10% increase in unit sales of printers, a 6% rise in ink revenue, higher revenue in the office shared inkjet printer business, reduced supply constraints, and pricing policies. However, higher material and logistics costs offset these revenue-producing factors, and fiscal year operating profit in this segment was lower than the previous year.
Epson reported that commercial and industrial printing revenue and profit for the fiscal year increased over the prior fiscal year. Strong demand from growth areas and the easing of supply constraints provided results in this segment that were basically in line with the internal plan.
Epson forecasts revenue and business profit growth for the remainder of its fiscal year (ending March 2024). Growth will be driven by the easing of supply constraints, leading to an increase in unit sales of office and home inkjet printers and commercial and industrial inkjet printers. Selling prices may decrease as supply and demand balances and logistics costs are expected to fall due to the better ocean freight rates.
The year 2023 appears to be starting on a very bright note for the major OEMs in this report. As more offices are being refilled after two years of the effects of COVID, many workers are still remote, and the hybrid work model keeps the need for print and imaging solutions in the office and at home bubbling. Sales revenue increases for both consolidated results and their print industry-related businesses were the norm for these OEMs during this first quarter of 2023. Consolidated operating profits showed a mixed bag as supply chain and shipping issues, while being overcome for most, still put profit pressure on all companies. In the printing businesses of the OEMs operating profits were healthy – in some even soaring. Canon was the exception with its printing business operating profit down. The effect of Konica Minolta taking large impairment losses greatly affected its consolidated operating profit (see Konica Minolta analysis above). However, the company more than made up for that with significant growth in the printing businesses operating profits. Kyocera’s Document Solutions Unit showed growth in both revenue and operating profit while Ricoh showed strong growth, both in consolidated and printing businesses, in revenue and operating profits. Xerox once again showed revenue growth and another profitable quarter.
Certainly, economic concerns will continue as the year progresses. These OEMs will continue to face challenges as business models are pressured and business strategies continue to change. As the companies execute their new strategic plans the adaptability and resiliency of the channel should enable them to make the necessary new business investments and changes while protecting profitable legacy business. Innovation in production, managing costs, and creating organizations that support new business environments will prove to be the key to the ongoing success of the industry. It will be interesting to see what the rest of 2023 brings in financial rewards.
Quarterly Revenue and Operating Profit trends, of the January through March period, of the industry players reported in this article:
*NOTE: Average yen to the dollar exchange rate for analysis and summary is based on averaging the daily ¥ to $ exchange rates during the quarter as provided by Macrotrends. Therefore, some of the USD $ conversions and $ percentage increases or decreases summarized may or may not align with what is reported by individual OEMs.