UPDATE - Konica Minolta Q3 profit down, camera ops in red
Thursday February 12, 4:59 am ET
By Nathan Layne
(Adds details, company comments, byline)
TOKYO, Feb 12 (Reuters) - Japanese camera and office equipment maker Konica Minolta Holdings (Tokyo:4902.T - News) said on Thursday that its quarterly operating profit slumped 27 percent as sharp price declines pushed its camera business into the red.
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Konica Minolta, created last August through the merger of precision equipment companies Konica Corp and Minolta Co, is the latest firm to see profitability in its digital camera operations deteriorate due to the industry's accelerating price war.
"Volumes are high and we are on target for unit sales, but competition has become fiercer and profitability is getting worse," said Kiyofumi Tanida, general manager of Konica Minolta's corporate accounting division, at a news conference.
"The price declines are particularly harsh in Europe. I can't say exactly how much, but it has been quite a fall."
The company, which consolidated its earnings on October 1, posted an operating profit of 18.3 billion yen ($174 million) in the latest quarter to December on sales of 282.1 billion yen. On a net basis, profit came to 10.56 billion yen.
That compares to the operating profit of 24.9 billion yen and revenues of 278.6 billion yen earned in the same quarter a year earlier according to a simple aggregate of Konica and Minolta's results in October-to-December 2002.
Still, Konica Minolta said brisk demand for colour copiers, pickup lenses for DVD's, and film used in the production of liquid-crystal displays (LCDs) has offset losses on cameras and the company maintained its forecasts for the full-year.
COPIER DEMAND STRONG
Konica said operating profit in its office equipment division jumped 24 percent from the previous year to 15.5 billion yen thanks to robust sales of multi-function printers. Demand for colour machines in Europe was particularly strong.
In other business segments, the company reported strong demand for optical pickup lenses used in DVDs, lens units for digital cameras and tri-acetyl cellulose (TAC) film used to make polarisation film, an essential film for LCD panels.
Konica Minolta maintained its group net profit forecast for the full year to March 31 at 17.0 billion yen on sales of 870 billion yen. That forecast reflects the former Konica's full-year earnings and Minolta's second-half results.
For reference, the company disclosed a forecast encompassing both Konica and Minolta for the full-year. That showed an estimate for a net profit of 23.8 billion yen and sales of 1.133 trillion yen, up 4.2 percent from the previous year.
Konica Minolta has been cutting costs and bolstering its lineup of colour copiers and printers as it aims to enter the top ranks of office equipment makers, including industry leader Canon Inc (Tokyo:7751.T - News) and Ricoh Corp (Tokyo:7752.T - News).
In fact, Konica's share of the European market for colour copiers has risen steadily over the past year or so, and it is now above industry heavyweight Xerox Corp (NYSE:XRX - News) and second-only to Canon, according to a recent J.P. Morgan report.
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