A Unique 2021: Imaging Channel Financial Halftime Review

The financial results for the second (calendar) quarter of 2021 have been released by every print OEM except for HP at this time and every one of the OEMs shows double-digit growth from the same quarter as last year. It would be easy to use superlatives like “return to growth,” “strong growth,” or “stunning growth” as some in the industry have already reported, yet while each OEM deserves congratulations for their performance it needs to be remembered that 2020 delivered the worst financial returns in the history of the imaging channel. Therefore, quarterly growth comparisons to any quarter in that year will always have the “COVID asterisk” attached. Since the second quarter 2021 results represent the halftime break of 2021, we’ve decided to provide a quick review of not only how the 2021 OEM print-related financials are stacking up to the comparable half in 2020 but more importantly, how they may be faring when looking at the last “normal” year of 2019. [i]  As we noted, every OEM experienced large double-digit print-related revenue growth for the second quarter:

2nd Quarter Print-related Revenue Growth Compared to 2nd Quarter 2020

Xerox Canon Ricoh Konica Minolta Kyocera Toshiba-TEC* Sharp* Epson Brother
212Q 22.4% 22.8% 19.4% 32.4% 41.4% 25.2% 10.0% 41.3% 17.9%

*Unlike the other OEMs, Sharp and Toshiba-TEC do not report print-related financials separately. Their print-related financial results and growth are estimated based on the interpretation of information found in financial statements and/or annual reports.

While the second-quarter worldwide print-related revenue reported by these OEMs is up by about 24% from the same period in 2020, recall that in the first quarter most OEMs continued to show year-over-year revenue declines (albeit smaller than the declines of 2020). Combining first-quarter and  second-quarter results buffers the first half 2021 growth rates to:

1H Calendar Year Print Revenue Growth Comparisons

Xerox Canon Ricoh Konica Minolta Kyocera Toshiba-TEC Sharp Epson Brother
2021 v 2020 5% 11% 9% 13% 17% 4% 19% 28% 12%

These are still excellent growth rates and reflect about a 12% worldwide year-over-year growth for the industry (HP hasn’t reported their numbers yet but we expect the worldwide growth rates to remain close to the same after they post their second-quarter results).

However, comparing the first half results of this year to the worst economic year of the industry can be deceiving since the unique events of 2020 were completely out of the control of the marketplace, manufacturers, and their resellers. So, let’s see how the first half of 2021 print-related revenue numbers of these OEMs compared to the first half of 2019.

This chart of the OEMs’ first half print-related revenue of the last three years (ranked by highest 2021 first-half revenue) makes it easy to see those who have “recovered” to revenue levels they last enjoyed in 2019:

1H print related revenue comparisons 2019-2021

It becomes apparent that some OEMs have shown a recovery, and even growth, from 2019 levels while others have found recovery to pre-pandemic 2019 revenue levels more challenging:

1H Calendar Year Print Revenue Growth Comparisons 2021 v 2019

Xerox Canon Ricoh Konica Minolta Kyocera Toshiba-TEC Sharp Epson Brother
2021 v 2019 -21% -1% 6% -10% -4% -13% 24% 19% 4%

The bottom line is that 2021 first-half industry revenues (excluding HP) have only just met 2019 levels with no real growth.

Canon and Ricoh have undertaken important reorganizations to better position themselves for the future and their first-half results may signal some level of early successes in these efforts. Canon has virtually matched their 2019 first-half revenue performance and Ricoh has grown from 2019. Konica Minolta has also undergone reorganization and while their first-half results still lag 2019 the company looks ready for future success. Epson, Brother, and Kyocera, like Canon and HP, have benefitted from remote and work-from-home trends. While it’s difficult to have a clear view of Sharp and Toshiba TEC’s print-related business as neither breaks out these numbers in their financial statements, it appears Sharp is recovering to 2019 levels while Toshiba is still off their 2019 print-related revenue results. Interestingly, Toshiba seems to be very focused on retail (POS) sales equipment in their FY21 business plan, spending 12 slides reviewing those plans and only three slides on their Workplace (MFP and print) plans. We wonder if their relatively low print-related revenue ranking within the OEMs and their continued struggles to grow in this segment is an outgrowth of this.

Xerox continues to struggle to find real revenue growth and is still underwater of their 2019 first-half revenue results. In response to changing trends in the industry, the company announced late last year its intention to “stand up” separate businesses of Software (such as CareAR), Financing through XFS, and Innovation (PARC energized). During the first half, the company reported that “several blue-chip companies” have begun using CareAR’s Service Experience Platform and a joint venture has been formed with a company in Australia that will use PARC’s industrial IoT to maintain road, railway, and bridge infrastructure. However, these businesses are yet to be reviewed in detail within public financial reports. The XFS business goal is to become a global leasing solution business providing financing for OEMs and other partners of software and IT (we know of at least one OEM partner – Lexmark). While XFS lease originations increased in the second quarter and XFS asset value stands at $3.39 billion (growing only slightly more than 1% from the previous quarter), it remains unclear just how all these new businesses are going since they are yet to be separate line items in any public financial reporting. Clarification is expected during the Investor Day Xerox has scheduled in November.

Wrapping up this unique halftime review we also looked at print-related operating income comparison trends for the first half. There were fewer companies that clawed back to their 2019 profit levels:

1H print related OP income comparisons 2019-2021

*HP numbers for 1H 2021 reflect only 1st quarter revenue as HP had not reported 2nd quarter at the time of this writing.

This chart gives a clear picture of where the print-related industry profits reside. Canon, although just making it back to 2019 revenue levels has managed to increase print-related profits by 25% over the first half of 2019. Epson and Brother’s print-related operating incomes appear to be commensurate with their revenue increases over 2019. The other OEMs still seem to be struggling to wring out operating profit growth from the print-related part of their business. As a reminder, the HP numbers for 2021 represent only the first quarter and if HP returns similar numbers in the second quarter, they will have exceeded their 2019 first-half figures. At Xerox, while the print business remains profitable unless some form of sustainable revenue growth pattern emerges it may find future EPS and cash flow return promised difficult to keep.

As the industry moves into the second half of 2021 it will be very interesting to keep monitoring the revenue and operating income recovery of the industry’s OEMs. Our view, however, is the same as it was when we reviewed the first-quarter results of 2021: “…while 2021 results will be better than 2020, no one should be lulled into a sense that the overall trajectory of the print hardware and consumable industry has changed.”

A resurgence of COVID-19 variants has already begun to slow down what was a welcomed economic recovery from 2020. Supply chain impacts may result in product shortages, making it difficult for some in the industry to produce and deliver products. Finally, although year over year growth has been reported, and some have come back to 2019 levels, the events of last year accelerated digital transformation to unforeseen levels, and office print reduction trends that go along with that remain. These trends will continue to accelerate as businesses support the new hybrid office ways of working. Print-related revenue and profit growth may only be fleeting for the next one to two years as the marketplace makes up the lost year of 2020, at which point the general print-related industry declines will return. Adaptability and survivability chances are greater for those OEMs that show growth during this time, and particularly for those with the larger operating income wells that can be used to fund the new strategic revenue and profit streams required for the future.


[i] Financials reported in yen (¥) are converted to USD ($) using the average of the daily ¥ to $ exchange rate for the quarter. For that reason, some of the percentage increases or decreases mentioned may or may not align with what is reported by individual OEMs.

Website | + posts

Thomas O’Neill, an analyst for BPO Media, is a 35+ year marketing and product strategy professional in the enterprise imaging and print industry. Beginning with positions in sales and training management, for the past 24 years he’s held director and manager positions at Canon, Océ, Lexmark and Minolta. He has extensive experience in hardware and software product marketing, strategic product planning and sourcing, solution sales, marketing content creation and strategies, branding strategy and vertical marketing strategies. Contact him at tom@bpomedia.com.

Tom O'Neill

Thomas O’Neill, an analyst for BPO Media, is a 35+ year marketing and product strategy professional in the enterprise imaging and print industry. Beginning with positions in sales and training management, for the past 24 years he’s held director and manager positions at Canon, Océ, Lexmark and Minolta. He has extensive experience in hardware and software product marketing, strategic product planning and sourcing, solution sales, marketing content creation and strategies, branding strategy and vertical marketing strategies. Contact him at tom@bpomedia.com.