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Konica Minolta Ekes Out Slight First-Quarter Revenue Growth, Strong Surge in Profits
Although the rest of the industry has struggled with sinking revenue and vanishing profits, Konica Minolta managed to buck these trends when it posted its first-quarter 2013 financial results on July 27. The company’s revenue rose slightly and its profit almost doubled. However, a closer look at the figures suggests that the good news is not as good as it might initially seem.
Konica Minolta reported ¥189.4 billion ($2.4 billion) in first-quarter revenue, up 1.7 percent from ¥186.2 billion ($2.3 billion) in the first quarter of 2012. This gain was modest at best, but any gain looks good in a quarter when rivals such as Ricoh and Xerox suffered revenue declines. However, put in historical perspective, Konica Minolta’s revenue essentially has been flat since bottoming out in the recession (see the chart below, A Closer Look), while most other
hard copy companies experienced some gains in 2010, even though they then gave up most or all of those gains in 2011 and 2012. In effect, Konica Minolta looks a bit better than competitors now only because it looked worse than they did in previous quarters.
Konica Minolta also posted a hearty first-quarter gain in revenue, but a similar deflating logic applies. The firm reported ¥6.3 billion ($80 million) in operating income, up 93.9 percent from ¥3.3 billion ($41 million) in the year-ago quarter. Despite the huge gain, the firm’s first- quarter operating income was exceedingly low compared to most of the company’s other post-recession quarters, let alone its pre- recession quarters.
The best measure of the inadequacy of Konica Minolta’s first-quarter operating income was the firm’s first-quarter operating margin, which was only 3.3 percent, making the quarter among the least profitable Konica Minolta has posted since it reported two quarters of operating losses at the bottom of the recession. Competitors such as Canon and Xerox posted operating margins close to or even above 10 percent in the same quarter.
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