Konica Minolta Announces Second Straight Year of Record Revenue

On May 13, Shoei Yamana, president and CEO of Konica Minolta Inc., announced fourth quarter and final FY2018 financial results for the company. Noting a shift to “higher value-added products” in core businesses and “effective use of advance expenses and expanded sales,”  Yamana reported that Konica Minolta achieved, for the second consecutive year, record high revenue of $9.3 billion in FY2018, an increase of 3% over FY2017. The company delivered a 16% increase in operating profit during FY2018 compared to FY2017. Yamana said growth in operating profit was due to increased revenue in the core businesses, increased gross profit ratio and SG&A expense ratio reduction. EPS grew from $0.60 in FY2017 to $0.80 for FY2018.

Billions of dollars Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 Increase (Decrease)
Revenue  $                   9.3  $                   9.5  $                   0.3 2.7%
Gross profit  $                   4.4  $                   4.6  $                   0.2 3.9%
Operating profit  $                   0.5  $                   0.6  $                   0.1 16.0%
Profit before tax  $                   0.4  $                   0.5  $                   0.1 22.4%
Profit attributable to owners of the Company  $                   0.3  $                   0.4  $                   0.1 29.3%

Konica Minolta reported that all geographic sales regions except Europe experienced revenue increases for FY2018. The U.S.A. region achieved an 8.2% revenue growth year-over-year when compared to FY2017, followed by China, Asia, and Japan. Konica Minolta attributed Europe’s 1.9% year-over-year decrease in revenue to lower manufacturing exports to China and continued Brexit uncertainty that affected all of Europe’s sales.

Geo region revenues
Millions of dollars Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 Increase (Decrease)
Japan $          1,770.74 $          1,782.02  $               11.28 0.6%
U.S.A. $          2,448.35 $          2,648.45 $             200.10 8.2%
Europe $         2,928.00 $          2,872.24 $             (55.76) -1.9%
China $             725.52 $             781.71 $               56.20 7.7%
Asia $             713.74 $             751.65 $               37.91 5.3%
Others $             711.77 $             713.25 $                 1.49 0.2%
Office Business

Konica Minolta reported 4Q FY2018 Office Business revenues down 3% and operating profit declining 15% from the same time as FY2017. The company noted a decline in monochrome model sales that was not completely offset by increased sales of color models as the reason for the decline. The company also pointed out record high sales of A3 models in March and that mass production and shipment of new products began to contribute to the next fiscal year results.

Billions of dollars 4Q FY2019
(Jan -Mar 2018)
4Q FY2017
(Jan -Mar 2018)
Increase (Decrease)
Office Business  
Revenue  $                1.41  $                 1.37  $             (0.04) -3%
Operating profit  $               0.14  $                 0.12  $             (0.02) -15%

For the fiscal year, Konica Minolta reported monochrome A3 model shipments declined 6%, However, color MFPs grew 10% over FY2017. Combined monochrome and color A3 MFP unit shipments grew by 3% over FY2017.

Non-hardware revenue declined for FY2018. However, gross profit for the full year showed a positive result year-over-year. Konica Minolta disclosed that non-hardware revenue was as high as 52% of Office Business segment FY2018 revenue with 4Q FY2018 showing a 49% contribution.

Revenue and operating profit for the Office Business segment increased year-over-year. Konica Minolta noted that the IT Service Solution revenue (part of the Office Business segment) grew 11% year-over-year while the rest of the Office Business segment declined by 1%. The IT Service Solution represented 13% of total Office Business segment revenue for FY2018, up from 12% in FY2017.

Billions of dollars Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 FY2018
Increase (Decrease)
Office Business  
Revenue  $               5.26  $                 5.30  $                 0.04 1%
Operating profit  $              0.40  $                 0.43  $                 0.02 5%

The company indicated that sales of high-speed color models in Europe, the U.S. and Japan expanded. In China and Asia, all models saw sales increases. Konica Minolta attributed the success in IT Services Solution to consolidation activities due to acquisitions and development of the sales structure for Workplace Hub.

Konica Minolta presented information on the bizhub i-Series that is expected to contribute to FY2019 results due to a “next-generation user interface,” “next generation MFP security” and “cost competitiveness through manufacturing innovation.”

Professional Print Business

Konica Minolta reported 4Q FY2018 Professional Print Business revenue grew by 6% over the same time period of FY2017. Operating profit grew 21% year-over-year compared to the same time period in FY2017. Noting significant sales increases of color models in China and Asia as drivers for this growth, Konica Minolta also stated the shift to high value-added marketing services with business expansion in Japan and the U.S. improved profitability. Sales of the “AccurioJet KM-1 digital inkjet press, label printers, and digital decoration printing equipment” significantly grew, especially in the U.S. and Europe.

Billions of dollars 4Q FY2019
(Jan -Mar 2018)
4Q FY2017
(Jan -Mar 2018)
Increase (Decrease)
Professional Print Business  
Revenue  $                 0.53 $                0.57  $         0.03 6%
Operating profit  $                 0.04  $               0.05  $         0.01 21%

Konica Minolta reported that Production Print shipments increased in FY2018 by 8% over FY2017. Color Production units grew at 6% and monochrome units grew 13%. Professional Print Business revenue had a 6% increase with operating profit growing by 48% year-over-year compared to FY2017. Konica Minolta attributed this growth to both hardware and non-hardware growth due to IQ-501 effects.

The company pointed out that MIF increases in Europe and the U.S., as well as overall color model sales growth in emerging markets, has produced page volume increases that contribute to higher operating profits.

Billions of dollars Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 FY2018
Increase (Decrease)
Professional Print Business  
Revenue  $                1.93  $              2.05  $         0.12 6%
Operating profit  $              0.08  $              0.12  $         0.04 48%
New Business

Created in FY2018, the New Business Segment reported revenue growth of 100% year-over-year. However, Konica Minolta showed an operating profit loss in this segment of $170 million.

Billions of dollars Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 FY2018
Increase (Decrease)
New Business
Revenue  $                 0.16 $               0.31 $          0.16 101%
Operating profit  $               (0.14) $             (0.17) $        (0.03)

The New Business segment contributed a little over 3% of total Konica Minolta FY2018 revenue. Konica Minolta is forecasting that this business segment will double that contribution to 6% in their FY2019 outlook.

Our Take

Konica Minolta has posted another record revenue year. Revenue up, operating profit up, and net profit/EPS up – Konica Minolta seems to be executing the “SHINKA 2019” Medium-Term Business Plan extremely well.

Out of the “Big 4,” with Canon and Xerox (both with fiscal years ending December 31, 2018), and Ricoh (who along with Konica Minolta ended the fiscal year March 31, 2019), Konica Minolta was the only one to see a revenue increase for FY2018. In addition, Konica Minolta’s 16% operating profit growth rate was almost twice the rate of the nearest similar competitor, Canon.

As in the past, at 75% of total revenue and 80%+ of the company’s operating profit, the Office Business and Professional Print Business segment were the cornerstones of Konica Minolta’s revenue and profits. Konica Minolta’s growth in Office Business and Production Print unit sales along with discipline in cost and expense management and accompanying structural reforms all worked together to grow the operating and net profit as they did. The increase in MIF and page volumes reinforces the efforts, particularly in the Production Print area along with growth within industrial printing from sales and print volumes attributable to the AccurioJet digital inkjet press. These business segments are critical to providing the investment cash necessary for Konica Minolta’s New Businesses.

Perhaps most unexpected is the 8% growth rate in the U.S. despite a “flat” market at best.  With new products arriving in the upcoming fiscal year, we anticipate Konica Minolta in all regions will report a successful FY2019.

There is a risk, however, as the A4 MFP products penetrate the office market that A3 page volumes will continue to erode. Konica Minolta, while having a strong A3 product set, will need a strategy to address this A4 market conversion with either increased A4 sales of their own or by being able to competitively compete with A4 products.

Under its Medium-Term Business Plan SHINKA 2019, Konica Minolta is looking at its future, understanding the speed and depth of digital transformations underway in the industries it serves. Developing the New Business segment is vital for Konica Minolta to meet their goal of being a highly profitable company.  Continuing to strengthen the profitability of the Office and Professional Print businesses will provide Konica Minolta with the needed cash flow to invest in the New Business segment. This should enable them to continue the steady growth they have already seen in the New Business segment, with the goal towards profitability. It has been a fun ride watching Konica Minolta as they keep executing their transformation strategies.

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