Konica Minolta Office Equipment Unit May Miss Target (Update1)
Oct. 11 (Bloomberg) -- Konica Minolta Holdings Inc., a Japanese maker of office equipment and digital cameras, may miss the revenue target at its biggest division this year as printer sales fall, the unit's head said.
Printers contribute less than a fifth of sales at the business technologies division, which accounted for 56 percent of Konica Minolta's total revenue in the fiscal first quarter. The unit, which also sells copiers that are combined with printing, scanning and fax functions, has forecast sales of 620 billion yen ($5.4 billion) for the year ending March 2006.
``We may not make it,'' Yoshikatsu Ota, Business Technologies President, said in an interview last week in Berlin. Reaching the goal will depend on ``how much loss from the printer side we could cover with the increase'' in sales of multifunctional products.
The Tokyo-based company is relying on sales of more profitable multifunctional color copiers to help counter losses from the digital camera division. President Fumio Iwai has narrowed Konica Minolta's product line as competition intensifies from Japanese office equipment makers Canon Inc. and Ricoh Co.
Shares of Konica Minolta have dropped 25 percent this year, making it the second-worst performer on the Nikkei 225 Stock Average, which has gained 15 percent in the same period. The shares fell 1.8 percent to 1,006 yen as of 11 a.m. in Tokyo.
Falling Prices
Worldwide shipment of printers, copiers and multifunctional products will probably increase by 7.8 percent to 124.7 million units in 2005, supported by demand for color devices, researcher Gartner Inc. forecast in August.
Even as unit sales rise, falling prices have forced manufacturers to cut profit forecasts. Seiko Epson Corp., the world's No. 2 printer maker, last month slashed its full-year profit target for a second time this business year because of falling prices for inkjet printers and flat-panel displays.
To arrest a decline in printer sales, Konica Minolta has introduced cheaper multifunctional copiers, such as the C250 model, which features a copy speed of 25 pages a minute, to attract smaller business customers.
Konica Minolta's second-quarter sales of multifunctional products were ``slightly above budget,'' Ota said. The business technologies unit plans to sell between 140,000 and 150,000 units of the machines in the current financial year, he said. The unit sold 19,200 color multifunctional products in the first quarter.
Narrowing Losses
The company targets selling at least 50,000 multifunctional products this year in Europe alone, said Robert Sethre, a Germany- based sales and marketing manager at Konica Minolta. In Europe, Konica Minolta ranked No. 1 in sales of full-color products in the first half of this year, with a 34 percent market share, according to researcher InfoSource.
Sales at the business technologies division were little changed at 137.2 billion yen in the first quarter, and the unit has forecast first-half revenue of 290 billion euros.
Konica Minolta's photo-imaging unit, which sells digital and film cameras as well as lenses and other photographic materials, narrowed its first-quarter operating loss by 63 percent to 729 million yen. Ota, also a board member at the company, which was set up after Konica Corp. and Minolta Co. merged two years ago, said the unit plans to further cut losses.
``The photo imaging sector has to be brought into a better shape,'' Ota said.
Digital camera makers such as Olympus Corp. and Fuji Photo Film Co. have also reported losses in their camera divisions on price competition and falling demand. Olympus, which reported a 62 percent decline in first-quarter profit, plans to cut 30 percent of its workforce at its camera unit this year.
Ota said a combination of the camera unit with a competitor is ``one possibility.'' He declined to say if the company is in discussion with another company.
``Olympus and Panasonic are very good corporations. Yet are they at all compatible? I don't know,'' he said.
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