Xerox continued to suffer the effects of Covid-19 in its third quarter, though not to the same extent as in the preceding three months.
Sales were down year on year, as the slow return to work kept a lid on office printing, especially in office equipment. Sales of entry level machines for work from home increased, while year on year sales of the Baltoro sheetfed inkjet press also increased. “Baltoro remains unmatched in the marketplace,” says CEO John Visentin.
It has benefitted from demand from companies engaged in printing for essential services – government, healthcare and schools are mentioned. Demand was strong in the North American and European markets.
However, the increase in sales was not enough to compensate for a year on year decline in sales of Versant and Iridesse machines. This is attributed to market uncertainty among print businesses. In all, revenue from equipment sales was down 16.1%. This, though, was an improvement on Q2 when equipment sales had fallen 38%.
Overall revenues for the company were £1.77 billion for Q3, down 19.7% on the same period in 2019 when it brought in $2.18 billion. Thanks to cost saving measures that will cut costs by $450 million over a year, Xerox remained in profit, though operating income was halved to $131 million ($262 million).
“The flexibility and financial discipline we have built in our company enabled us to increase earnings and cash flow sequentially. While we can’t reliably predict the ongoing economic impact of the pandemic, we are prepared to respond however events unfold and are committed to delivering positive cash flow and earnings in the fourth quarter,” says Visentin.
However, the company concedes that the resurgence of the coronavirus around the world “leads us to anticipate that our revenues will continue to decline significantly as compared to the prior year, as businesses hold off or delay purchases until there is a more certain path to controlling the pandemic and to economic recovery” it warns.
In Q3, sales of high end equipment fell 28% to $69 million ($96 million). Versant, Iridesse and iGen sales are linked to business activity in the SME sector “where production printing applications depend on business reopening activity.” High end colour installs dropped 38% while mono machines dropped 13%.
