February 2, 2021 – Konica Minolta released consolidated financial results for the nine months ended December 31, 2020 (from April 1, 2020 to December 31, 2020).
In the nine months ended December 31, 2020 (the “current period”), the Group recorded revenue of 614.8 billion yen, a decrease of 17.7% year-on-year. Although lockdown was re-imposed in certain areas to curb the spread of COVID-19 during the three months ended December 31, 2020, the Group revenue saw continuous signs of improvement after bottoming out in May 2020. The decrease ratio of quarterly revenue year-on-year gradually improved from 28% in the first quarter ended June 30, 2020, to 17% in the second quarter, and even to 8% in the third quarter ended December 31, 2020. Looking by Business units, revenue in Workplace Hub, measuring instruments, performance materials, and imaging-IoT solutions saw an increase year-on-year in the current period. Also, when looking revenue on a quarterly basis, revenue in IT service solutions, healthcare, precision medicine, and visual solutions increased in the third quarter ended December 31, 2020, from a year earlier. By region, although revenue decrease was seen across the globe year-on-year in the first quarter ended June 30, 2020, the situation improved in the second quarter ended September 30, 2020, in which China saw an increase, whereas Europe recovered to a little under 90%, as well as Japan and the United States to slightly under 80% of the level compared to the previous year. Further in the third quarter, not only China but also Japan and other Asian countries saw an increase in revenue from a year earlier. Although seeing some improvements, revenue in Europe during the October-December period was still a little under 90% and the United States a little more than 80% of the level compared to the previous year.
Operating loss in the current period was 24.6 billion yen, whereas operating profit of 10.5 billion yen was marked in the same period of the previous year. While revenue was picking up, the Company continued to successfully maintain the level of selling and administrative expenses, which were below 100.0 billion yen in the first quarter ended June 30, 2020, to around the same level － 3 － in the second quarter, as well as in the third quarter in 2020. As a result, operating loss of 22.6 billion yen in the first quarter gradually improved during the year: in the second quarter ended September 30, 2020, operating loss decreased to 5.2 billion yen; and in the third quarter ended December 31, 2020, it even turned into the black to an operating profit of 3.2 billion yen. Gross profit ratio was sluggish during the six months ended September 30, 2020, due to a plunge in demand and a roll-out of production adjustments with an aim to improve cash flow status. However, the profitability improved in the third quarter ended December 31, 2020, thanks to a more balanced sales mix as projected during the quarter, although it was still negatively affected by a relatively high ratio of low-priced products. Also, in the third quarter, the Company implemented structural reforms mainly within the office unit to build a more profitable structure that can adapt to a foreseeable business environment and to revive and achieve significant growth in its earning power starting from the next fiscal year.
Loss before tax of 28.4 billion yen was marked in the current period, whereas profit before tax of 5.5 billion yen was recorded in the same period of the previous year. Loss attributable to owners of the Company was 20.6 billion yen, whereas profit attributable to owners of the Company was 2.1 billion yen in the same period of the previous year.
The Company continued to secure its capital efficiency and liquidity on hand by shortening the cash conversion cycle mainly through improving days in inventory turnover, which had tentatively increased amid a dramatic plunge in sales volume, and by tightening the capital spending, while investing strategically in growing areas. Also, the Company successfully repaid 30.0 billion yen of the 85.0 billion yen of borrowings originally financed at the beginning of the current period and paid out the dividend accrued as of September 30, 2020. The Company has newly launched a new medium-term business strategy “DX2022,” which mainly focuses on executing and achieving positive results for projects and plans implemented or still continuing under “SHINKA 2019,” the previous Medium-term Business Plan. The basic policy of “DX2022” is to “leap to highly profitable businesses through DX” and to “evolve into a company clearly committed to solving social issues.” In order to enhance customers’ value, the Company has reassessed the classification of the original three business lines, namely Core Business, Growth Business, and New Business, and also reviewed the existing reportable segments in accordance with the new strategy under DX2022.
As office printing continues to decline along with a change in customers’ work style, the traditional Office Business will implement a profit structural reform in the current fiscal year to maintain its earning power. Further, in order to enhance customer value, the business is transformed into the Digital Workplace Business by integrating IT service solutions and Workplace hub, utilizing the customer base developed in the past. Professional Print Business, Healthcare Business, and Industry Business will become the main pillars for the Company’s growth strategy, aiming to enhance customer value in the fields of measurement, inspection, and diagnosis by combining the Company’s core imaging technology and AI technology.
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