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Seiko Epson says printer profits on recovery trackTOKYO,Sept 28 -Seiko Epson Corp. , the world's second-largest printer maker, said it is on track to boost profitability in its printer business thanks to new products and cost cuts.
The company has focused on trimming costs and bolstering its product line-up, after tough price competition from Hewlett-Packard
and Dell Inc in the U.S. led to a sharp drop in profits at its printer division last year. Analysts say that Seiko Epson's problems in the U.S. market were in large part due to its lack of a full line-up of multi-function printers (MFPs) as demand took off and prices fell. Hewlett-Packard was better prepared to tap MFP demand.
Seiko Epson unveiled nine new ink jet printers on Tuesday, including four multi-function models. MFPs typically combine printing, copying and scanning functions into one machine.
"We have come out with a line-up of MFPs to address market demand. Also, consumption of ink is growing nicely and has been higher than we expected," Seiko Epson President Saburo Kusama told a press conference.
"Our ink jet printer business hit bottom in the second half of our 2003/04 financial year. Operating profit margin is certain to improve this year."
Operating profit in Seiko Epson's printer division slid 43 percent to 46 billion yen ($415.8 million) in the financial year ending March 31. With 2003/04 sales of 920.3 billion yen, the printer division generated an operating margin of five percent.
About 60 percent of Epson's revenue comes from printers and related products; the rest from from electronics devices such as semiconductors and liquid crystal displays.
Seiko Epson has forecast the printer division's margin would climb to 5.7 percent in the first six months to end-September and then to roughly 8 percent in the next six months.
"We should hit that (8 percent) target," Kusama said.
CANON AND EPSON NECK-AND-NECK
Canon Inc, Seiko Epson's main competitor in the Japanese market, also unveiled a new line-up of ink jet printers on Tuesday, including nine single-function models and three MFPs.
Both Canon and Seiko Epson — which each have a market share of over 40 percent of the Japanese ink jet printer market — said they were aiming to capture 50 percent.
Gartner Japan analyst Tomoko Mitani said Canon and Seiko Epson's new line-up of multi-function printers could hurt Hewlett-Packard's attempts to grab a larger slice of the Japanese market.
HP is scheduled to unveil new printers in Japan next week.
* Post was edited: 2004-10-04 11:02:00
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