targets 140% op profit growth in 3 yrs
Thursday March 18, 5:36 am ET
By Kiyoshi Takenaka
(adds president comments, fund manager comments, background)
TOKYO, March 18 (Reuters) - Japan's Konica Minolta Holdings Inc (Tokyo:4902.T - News) said on Thursday it aimed to boost its operating profit by 140 percent in three years by focusing on its core business areas of office equipment and optical devices.
ADVERTISEMENT
In announcing a medium-term business plan, the Japanese camera and office equipment maker said it aimed for a group operating profit of 160 billion yen ($1.5 billion) in the year ending in March 2007.
Konica Minolta, created last August through the merger of precision equipment companies Konica Corp and Minolta Co, estimated it would make a group operating profit of 66.7 billion yen in the current business year, combining both firms' full-year results.
"Although it is only six months (after the merger), we are overtaking Xerox (NYSE:XRX - News) to become the No.3 player in Europe in colour multi-functional printers," Konica Minolta Chief Executive Fumio Iwai told reporters.
"In optical devices, we are going to defend our No.1 position. We won't allow anyone to take this position from us."
As part of its drive to boost profitability, Konica Minolta plans to cut its group workforce by seven percent to 32,600 by March 2006. It also plans to slash interest-bearing debt by 43 percent to 175 billion yen in three years to strengthen its balance sheet.
The company project group sales to grow 17 percent in three years to 1.33 trillion yen due to brisk demand for its mainstay copiers and printers as well as its optical pickup lenses used in DVDs and lens units for digital cameras.
INVESTORS SCEPTICAL
Some investors, however, wondered whether this was feasible.
"I don't know if these goals are really achievable. Competition is getting fiercer in digital cameras, and they've got mighty rivals like Canon (Tokyo:7751.T - News) in office equipment," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.
Konica Minolta said it now expected digital camera sales in the next business year to remain virtually flat from this business year at around three million units.
The company had previously projected digital camera sales of 3.5 million units for next year.
Larger rival Sony Corp (Tokyo:6758.T - News) is projecting sales to grow 40 to 50 percent next business year.
"We have shifted our focus to profit rather than volume for next year...Three million would be the best we could do," Konica Minolta Senior Executive Officer Masaru Kanbe told reporters.
Prior to the announcement, shares in Konica Minolta closed up 0.15 percent at 1,353 yen, compared with a 0.41 percent rise in the benchmark Nikkei average (^N225 - News). (Additional reporting by Yuka Obayashi)
($1=107.18 yen)
Original Post