Xerox is anticipating a return to growth as employees return to work and so return to printing in the office this year. The company is confident of this happening and it is a “matter of when not if”, according to CEO John Visentin. The ‘when’ is expected to be in the second half of the year.
The last year “was a challenging year for Xerox”, the CEO says. This is seen in results that show revenue at a stand still at $7.0 billion for the year compared to 2020, but with a pretax loss of $475 million compared to a $252 million pretax profit.
The company had anticipated a return to work before the wave of Delta and then Omicron variants of Covid-19 swept across the world, keeping office staff at home and slowing economic activity in general. It was also hit in the final quarter by supply chain issues: the difficulty in obtaining chips meant that it was unable to deliver product despite orders. Its order backlog increased to $350 million and will take until the second half to unwind, provided there are no further hits to the supply chains.
The lack of office printing hit post sale revenues which are made up of toner, papers and service revenues.
And while Visentin expects a return to working in offices, the company acknowledges that “come companies will maintain some form of hybrid workplace indefinitely”. This means some print at home, but more likely it means employees either using the cloud to print in the office while working from home, or else saving work that needs to be printed until their days in the office.
The final quarter was worst hit by supply chain issues which have continued into the current year. The company also experienced a 24.7% drop in equipment sales in the quarter. Sales of entry level machines (perhaps for print at home) increased, but revenue from high end equipment, covering Versant, Iridesse an iGen machines fell from $119 million in Q4 2020 to $86 million in Q4 2021. This is a drop of 27.7 million.
Production level print equipment did not feature in commentary which highlighted the growth potential of Xerox Financial Services, its 3D print and bridge sensors business and its maintenance service software operation CareAR. Nor did Visentin mention Fujifilm and the relationship between the two businesses since the end of technology and marketing agreements between the companies.
