02 August 2020 Business

Office closures hit digital press suppliers

Companies supplying digital presses have lost revenue as closed offices mean no printing, no clicks and few machinery sales.

The impact of lockdown around the world has hit revenues for digital press suppliers, where the closure of offices has curbed volumes of print, click charges, service and consumable revenues.

The extent of this became apparent with publication of quarterly figures from Xerox, Konica Minolta and Canon. The two Japanese companies declared losses for the second three months of the year, though all have reported a slight pick up in June after two dismal months.

For Canon, sales were down 25.7% following a ¥70 billion hit, leading to an operating loss of ¥17.8 billion. Sales in the office business unit, which includes production printing, were down 30%. Equipment sales in the production print area fell 19.3%, with this mitigated by the introduction of iX models in the cutsheet inkjet portfolio.

It notes that the expected sales boost from exhibitions had not taken place because of postponements. It is now planning what it calls “customised online product demos”.

Canon expects a slight pick up towards the end of the year as employees return to offices and begin printing again.

Xerox likewise anticipates a return of office workers rather than a wholesale and a permanent shift to work from home arrangements. Having closed premises around the world, the company has begun opening facilities and now reckons that 50% of staff are now working on site in some way.

It has also reported a trading improvement in June, but not enough to compensate for declines in the previous months, nor to the level of 2019. Revenues were down 34.6%, to $1.465 million, equivalent of an $800 million hit.

Sales of high end colour presses dropped 58%, the worst segment for Xerox in the quarter. In contrast high end mono sales rose 2% driven by demand to print transactional statements and possibly by decisions to replace existing machines with more of the same, rather than move up into inkjet.

However, thanks to financial discipline installed in the last couple of years, the company did not report a loss. Further, Xerox was able to pay off a lump of debt, anticipating refinancing at better terms. It is also able to fund further tuck in acquisitions following purchase of a business in Canada and two in the UK earlier this year.

Konica Minolta was unable to avoid the loss as revenue in the quarter dropped 28% with a fall in revenue of 37% in its professional print sector, leading to the company incurring a ¥7.1 billion loss for the division. Operating loss for the whole of Konica Minolta was ¥22.6 billion.

On the positive side, it says the the sales and sales pipeline for high speed production print, the new C12000 and C14000 presses, increased. Sales of the KM1 B2 inkjet press declined, but there is some optimism as “sequential improvement in demand was seen from medium and large sized printing companies, which are key customers of the company”.

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Results from all digital press suppliers are showing their exposure to the office market, where work from home has depleted demand for printin, resulting in unprecedented losses for Japanese suppliers.

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