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Fiscal 2022 kicked off amidst a maelstrom of global socio-economic pressures. Business performance is still impacted by ongoing pandemic-related issues—especially the zero-tolerance COVID strategy pursued in China, which has led to localized lockdowns affecting manufacturing output. Add to this the accelerated inflation, a global shortage of semiconductor chips, supply chain delays, continuous hikes in interest rates and energy prices, the threat of shortages, as well as the ongoing crisis in Ukraine and you could be forgiven for thinking that the aggregating effect spells bleak times for the digital imaging and printing industry.
Macro challenges notwithstanding, most OEMs reported encouraging signs of progress and recovery during the first half of the financial year. Here are some high-level findings for fiscal 2022 so far:
- Most vendors saw an upswing in revenue compared to the 2021 financial year. Japanese OEMs like Brother, Canon, Konica Minolta, Toshiba Tec., Kyocera, RISO, and FUJIFILM Corporation, in particular, are reaping the benefits from a weak yen—leading to a boost in not just revenue, but profits, too.
- Some OEMs took steps to mitigate the effects of tight supply, higher material, and logistic costs to consolidate and protect their product supply with largely positive results. Order backlogs were transformed into revenue partly through measures like making price adjustments, design modifications, as well as changes in transportation routes and methods.
- Xerox reported that supplies, paper, and other sales (such as transactional supplies) are up due to pricing actions as well as a gradual recovery in general print-related activity.
- Toshiba Tec. coped well with net sales in its Workplace Solutions Business segment going up. The company ensured better availability of office MFP hardware by actively making design changes and adopting different components.
- Ricoh’s Digital Products arm introduced flexible production measures and cost-reducing activities through structural manufacturing reforms and saw an increase in production of high value-added products.
- FUJIFILM worked to secure components through tighter coordination among multi-disciplines and introduced alternative parts at an early stage to offset product supply issues. It also revised product prices from November 2022 worldwide to secure profitability. These measures helped boost revenue from overseas exports of MFDs/printers and consumables.
- Operational performance is dependent on regional conditions. Personal consumption increased at a rapid rate and economic activities continued to recover in Europe and North America—albeit moderately given the current economic climate. In China, the speed of recovery of personal consumption declined due to stringent COVID strategies, while Japan, India, and southeast Asia saw a modest economic recovery and an uplift in personal consumption with the easing of restrictions over the first half of the year.
- Most OEMs saw a healthy increase in net sales and orders year-over-year. However, there’s still some way to go for businesses to get back to pre-COVID levels, with most vendors saying they were working to get back to 80% of where they were at in 2019. Some areas, such as non-hardware, are showing a good recovery with some vendors’ sales results more akin to that seen pre-pandemic.
- In the production market, there have been healthy first-half performances for many vendors, with some seeing overseas sales climb particularly in the Americas and Europe year-over-year.
- Canon saw consecutive quarterly sales growth, with increases in product supply levels leading to a growth in unit sales. There are also robust orders coming in for the varioPRINT iX series. The company reported a significant increase in operating profit during the third quarter of FY2022, compared to the previous year during the same time period.
- Konica Minolta’s Professional Print Business recorded higher revenue and profits, while production print growth in non-hardware sales was at 98% of FY2019 levels—a trend the vendor predicted at the close of FY2021.
- FUJIFILM’s Graphic Communication business saw a climb in revenue (21%) year-over-year thanks to increased shipments of production printers to the US and Europe.
- Most vendors in the office hardware market have seen an increase in revenue over the course of the first two quarters of 2022, but a decline in profit as production, material, and logistics costs have skyrocketed. In some instances, hardware unit sales have decreased. HP, for example, has seen a 3% decrease in hardware units year-over-year. Generally, sales of hardware units remain favorable considering the difficulties associated with costs and the supply chain. Most vendors have adjusted pricing to try and offset rising costs, but has generally not reflected as well as expected in profit so far.
Watch for further coverage of leading OEMs financials in the office and production space to land mid- 2023.
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