KONICA MINOLTA:10% WORKFORCE CUT & LOSSES
KONICA MINOLTA:10% WORKFORCE CUT & LOSSES
2005-11-09 at 10:54:00 am #14553
Konica Minolta Expects Loss, Plans 10% Workforce Cut
Nov.05 — Konica Minolta Holdings Inc., a Japanese maker of office equipment and digital cameras, slashed its full-year earnings target to a loss on costs to cut 10 percent of its workforce and reorganize its photographic business.
Net loss is forecast at 47 billion yen ($399 million) for the year ending March 31, the company said today in statement filed to the Tokyo Stock Exchange. That compares with an August forecast of a 23 billion yen profit and 7.52 billion yen net income a year ago.
The company, whose stock is the second-worst performer on the Nikkei 225 Stock Average this year, has seen prices fall for digital cameras and demand weaken for its photographic film. It joins Olympus Corp. and Pentax Corp. in eliminating jobs to cut costs amid competition from bigger rivals such as Canon Inc.
“The amount of loss forecast for the year is a surprise,” said Yoji Takeda, who oversees $300 million as head of Asian equities at RBC Investment Management (Asia) Ltd. in Hong Kong. “Restructuring and job cuts are the right steps and offer hope of recovery.”
The Tokyo-based company, set up after Konica Corp. and Minolta Co. merged in 2003, plans to eliminate 4,000 of its about 33,000 jobs. The cuts will be carried out in “about a year,” President Fumio Iwai said at a news conference.
Restructuring costs will amount to 90 billion yen this year, said the company, which today said it doesn’t plan to pay an annual dividend.
Smaller Photo Unit
Konica Minolta aims to reduce the size of its photographic division as it shifts focus to office equipment and other businesses. The company had expected reorganizing the photo unit would cost 34 billion yen in four years to March 2009, according to a earlier restructuring plan.
“With the lack of demand for film and photo printing, we just don’t see any potential for growth,” Iwai said. “Eventually, we want to shrink the photographic segment to below 100 billion yen in terms of annual sales.”
The company today cut its sales forecast for the photographic unit, which sells digital cameras, film and printing paper, to 185 billion yen from an earlier target of 230 billion. The segment is expected to have an operating loss of 5 billion yen this year.
In the six months ended Sept. 30, the unit’s sales fell 25 percent to 111.3 billion yen from a year earlier, and had a 719 million yen operating loss.
Konica Minolta said today it shipped 1.17 million digital cameras in the first half, including 90,000 SLRs, or single-lens reflex cameras aimed at professional and serious amateur photographers. Prices of its compact digital cameras fell 6 percent in the period, the company said.
Tokyo-based Pentax, which makes Optio cameras and medical equipment, today said it had a loss in the second quarter on costs to reorganize its business. The company plans to eliminate 300 jobs in the next two years to reduce costs.
In the three months ended Sept. 30, Konica Minolta’s net loss totaled 10.8 billion yen, compared with a 955 million yen profit a year earlier. Bloomberg calculated the quarterly results by subtracting the first-quarter numbers from first-half results the company announced today.
Operating profit, or sales minus the cost of goods sold and administrative expenses, in the quarter rose to 21.2 billion yen from 15.6 billion yen. Sales rose 0.2 percent to 273.6 billion yen.
Net loss was 3.48 billion yen in the six months ended Sept. 30, compared with an 8.2 billion yen profit a year earlier. The company had forecast a 7 billion yen profit. Sales fell to 517.6 billion yen from 535.1 billion yen.
The company had a 22.8 billion yen charge in the first half to write down the value of assets.
In the six-month period, sales at the office equipment unit, which includes copiers and printers, fell 3.8 percent to 284.7 billion yen. Operating profit rose 5 percent to 28.1 billion yen.
Its optics business, which makes lenses used in mobile phones, had a 13.2 percent sales increase in the first half. The segment’s operating profit gained 9.9 percent to 7.9 billion yen.
Shares of Konica Minolta rose 2.6 percent to 1,010 yen in Tokyo today.