COVID-19 Crisis Hurts Every Epson Business Segment
Due to the COVID-19 crisis, Epson claims negative revenue in every business segment in the first quarter of 2020 (Q1, 2020 ended) ended June 30.
The company recorded JPY¥193.2 billion (US$1.82 billion) in revenue for the period, a decline of 22.6% year on year. Revenue was positively affected mainly by increased demand for inkjet printers in advanced countries, where more people began to work from home as the coronavirus spread. However, revenue was hit hard by decreased demand in emerging markets where economic activity was restricted.
Business profit was JPY¥4.3 billion (US$40.58 million), down 3.2% year on year. While the decrease in revenue had a significant negative impact on business profit, Epson limited the decline by immediately cutting costs across the Epson Group in reaction to the spread of the coronavirus.
Profit from operating activities was ¥2.0 billion (US$18.87 million), down 40.1% year on year. Profit before tax was ¥1.1 billion (US$10.38 million), down 59.7% year on year. The loss for the period attributable to owners of the parent company was ¥0.2 billion (US$1.89 million), compared to a ¥0.2 billion (US$1.89 million) profit in the same period last year.
Looking at the printing solutions segment, printer business revenue decreased. Office and home inkjet printer revenue decreased. Total office and home inkjet printer revenue also decreased as a result of negative foreign exchange effects. Consumables revenue increased because sales of ink cartridges for SOHO / Home printers increased due to a rise in printing demand from the growing number of people working or learning from home during the pandemic. Serial impact dot matrix printer revenue decreased due to negative foreign exchange effects and a decline in sales associated with market contraction. Revenue in the professional printing business decreased. Segment profit in the printing solutions segment increased despite the decrease in revenue and negative foreign exchange effects, because sales of consumables increased and because spending was rigorously reviewed and sharply curtailed. As a result, revenue was ¥138.0 billion (US$1.30 billion), down 15.4% year on year. Segment profit was ¥17.5 billion (US$165.12 million), up 28.4% year on year.
Speaking of the outlook for the future, Epson expects first-half revenue to decrease compared to the same period last year. In the printer business, it expects home use to fuel continued growth in sales of home and office inkjet printers and consumables in developed markets in places such as North America and Western Europe. However, the pandemic is likely to cause product supply delays and weaken demand and sales. The company predicts that second-half revenue will be slightly below the same period in the previous year.
“Although we expect to benefit from the launch of strategic products, we expect to feel the lingering effects of the pandemic in certain regions. We are forecasting a year-on-year decrease in every profit category from business profit on down,” said president Yasunori Ogawa.
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