Konica Minolta sees big loss, steps up restructuring
Fri Nov 4, 2005 4:17 PM IST
By Nathan Layne
TOKYO (Reuters) - Japan's Konica Minolta Holdings Inc. said on Friday it swung to a first-half net loss and now expects to post a huge loss for the full year on hefty costs to downsize its struggling photographic film and camera operations.
The world's third-largest maker of camera film after Eastman Kodak and Fuji Photo Film Co. said it would book 90 billion yen ($768 million) in restructuring costs in the year to March as it shuts factories, writes down assets and cuts jobs.
Konica Minolta President Fumio Iwai said the move would help speed up a shift of resources to more promising areas such as colour office copiers and liquid crystal display materials, and away from the deteriorating market for analogue film.
The restructuring charges are nearly three times larger than a plan unveiled earlier this year that called for a 34 billion yen special loss over four years through March 2009. It now wants to deal with all of its problems in the current business year.
"Looking at the worsening market conditions, we decided to deal with things more quickly," Iwai told a news conference. "We are going to shrink operations targeting the consumer market and accelerate our transformation to a business-to-business firm."
The company, created in August 2003 through the merger of Konica Corp. and Minolta Co., said it now expected to post a group net loss of 47 billion yen in 2005/06, down from its previous forecast for a profit of 23 billion yen.
Giving a breakdown of the special loss, the company said it would spend 27 billion yen for consolidating factories and writing down the value of equipment, and the remaining 63 billion yen on rationalising its sales network and cutting workers.
Iwai said the company would look to slash about 4,000 jobs, or roughly 12 percent of its group work force of 33,000, although he did not give an exact time frame for the move. "Let's just say we are not talking about it taking three or four years."
It will downsize its digital camera operations, including single lens reflex (SLR) models, which have sold well recently. There is no change, however, to Konica Minolta's plans to jointly develop digital SLR cameras with Sony Corp., Iwai said.
COPIERS STRONG
Stripping out special losses and restructuring charges, Konica Minolta reported healthy results due to strong sales of multi-function office copiers, triacetyl cellulose (TAC) film used in LCD panels, and medical equipment.
The world's No.4 copier maker after Canon Inc., Xerox and Ricoh Co. said group operating profit was 39.41 billion yen ($336 million) in the April-September first half, up from 32.5 billion yen in the same period last year.
The result beat the market consensus for 36.3 billion yen, according to a poll of six analysts by Reuters Estimates. Konica Minolta itself had forecast a profit of 34 billion yen.
Operating profit in its core office equipment division rose 5 percent to 28.1 billion yen as strong sales of colour copiers offset sluggish laser printer sales amid intense competition with Hewlett-Packard Co. and Dell Inc.
Even its photo imaging division, which handles film and cameras, showed an improvement. The division's operating loss narrowed in the first half to 720 million yen from 4.0 billion yen a year earlier, due to cost cuts.
But a special loss of 28.7 billion yen, mainly for restructuring and the writing down of assets in its photo imaging division, pushed it to a first-half net loss of 3.5 billion yen, compared with a net profit of 8.2 billion yen the year before.
Konica Minolta also lowered its full-year operating profit forecast by 15 billion yen to 75 billion yen, reflecting a bearish outlook for its laser printer business and expectations of sluggish sales of compact digital cameras and photo film.
In light of the net loss, Konica Minolta said it would not pay a dividend for the first or second half. It had previously estimated paying 10 yen per share for the full year.
Prior to the announcement, shares in Konica Minolta closed up 2.6 percent at 1,010 yen, in line with Japan's electrical machinery index.
(Additional reporting by Kiyoshi Takenaka)
