Two years after the COVID-induced market collapse, the copier and printer industries continued to recover in fiscal year 2022. At Actionable Intelligence, the leading source of news and analysis for the home and office printer and copier industries, we saw product availability improve throughout the year. Snarled supply chains were straightened out and semiconductor shortages eased, and as a result, most hardware manufacturers reported revenue growth in FY 2022. Profitability proved to be more problematic, however, and margins were eroded by inflation in Europe and the U.S. as manufacturing and transportation costs rose.
In addition to tough market conditions, our research indicates that print volumes, which have been a perennial problem for over a decade, continued to decline in the U.S. last year. While office printing has improved since the darkest days of the pandemic, people aren’t printing like they did 10 years ago. Throughout 2022, we saw reports of lower paper consumption in the U.S., and home printing volumes—which rose sharply in 2020—resumed their familiar downward slide. Hybrid work isn’t offering much relief. The variety of digital workflows adopted amid the pandemic—both in the office and at home—often stymie hard copy generation.
Company-wide Performance
For our FY 2022 review, we used the financial results from each firm based on its individual fiscal year. For example, HP’s 2022 fiscal year ran from 11/1/21–10/31/22. The fiscal years at Canon, Ninestar and Xerox followed the calendar year and ended 12/31/22. For most of the Japanese OEMs, including Brother, Epson, Fujifilm, Konica Minolta, Kyocera, Ricoh, Sharp and Toshiba Tec, FY 2022 ended 3/31/23. The same is true for Kyocera, but it refers to the year ending 3/31/23 as fiscal 2023. For our purposes, we’re calling the year under review fiscal year 2022. To compare results, we converted all revenue and profits from each company to U.S. dollars using the exchange rates on the date each firm’s fiscal year ended.
None of the companies we follow market printing equipment, supplies and related services exclusively, and Figure 1 shows the total business at each firm in FY 2022. Note that several firms were adversely impacted by extraordinary events. Konica Minolta and Sharp reported big impairment losses in Q4, resulting in both companies posting full-year operating and net losses. Toshiba Tec did post an operating profit for the year, but the cost of litigation related to its Retail Solutions segment left it with a net loss for the year.
To better monitor the industry’s pre- and post-COVID health, in Figure 2 we compared FY 2019 results to FY 2022, and they’re promising. Except for Xerox, the hardware companies we follow had higher revenue last year. Canon, Epson, Fujifilm, HP and Kyocera had higher operating and net profits, too. But that wasn’t the case for every firm. The operating and net profits of Brother, Konica Minolta, Sharp and Xerox were lower in FY 2022. Ricoh almost cleared the bar, but its operating profit was slightly lower than in FY 2019. Toshiba Tec missed the mark largely because of the lawsuit it lost in Japan as noted above.
Printer Performance
At Actionable Intelligence, we follow the businesses of home and office hardware OEMs closely. Figure 3 compares the printer and copier businesses of the vendors we track. However, our comparison isn’t purely apples-to-apples because some companies include higher-end graphics and production devices in their respective printing segments while others don’t. Regardless, our comparison provides a useful look at how the printing segments that include A3 and A4 hardware and supplies fared for different OEMs.
Most of the A4 desktop printer vendors had a good FY 2022 as product availability improved. Brother’s Printing and Solutions revenue set a record high—sales of laser machines grew 41 percent year-on-year while inkjet hardware revenue rose 33 percent. Brother shipped 8 percent more laser printers and 26 percent more inkjet devices. Things at Epson’s Printing Solutions segment were similar with revenue up 15.7 percent. The group reported a 16.8 percent increase in SOHO and home inkjet printer sales and a 20.8 percent uptick in shared office inkjet printer revenue. Total unit sales of Epson’s SOHO and home inkjet printers were a record 17 million units, up 2 percent from the year prior, while unit sales of high-capacity ink tank printers grew from 11.6 million units to 12.4 million units last year. However, Epson said shipments of ink cartridge models continued to fall, dropping from 4.8 million units to 4.3 million units last year.
Despite its revenue dropping 6.1 percent in FY 2022, HP Printing generated more revenue and profit than any of its competitors’ printing businesses. The firm reported that revenue from its commercial hardware was up 0.4 percent while sales of consumer hardware tumbled 11.3 percent. It had higher sales of HP+ and Big Tank devices as subscriptions to its Instant Ink program grew.
Hardware sales at the Chinese firm Ninestar Corporation also grew last year. With supply-chain issues resolved, revenue from the firm’s Lexmark subsidiary was up 7.3 percent and hardware shipments climbed 20.9 percent. Ninestar’s smaller laser printer manufacturing subsidiary, Pantum, is now the world’s fastest-growing printer vendor, and its revenue grew 23 percent in FY 2022.
While most printer manufacturers saw hardware revenue and unit shipments rise, their profits faced headwinds. Rising costs and less-than-robust sales of consumables eroded Brother’s Printing and Solutions profitability. In FY 2022, its equipment consumables ratio stood at 51 percent, down from 57 percent in FY 2021. While revenue from laser consumable sales grew 3 percent, that was largely due to a favorable currency exchange—in local currency, revenue from laser cartridges was down 8 percent. Similarly, inkjet consumables revenue was up 9 percent for the year but flat in local currency. Faced with higher costs and lower consumables sales, the operating profit for Epson’s Printing Solutions business tumbled 16.1 percent, and the group’s operating profit margin contracted from 13.7 percent in FY 2021 to 9.9 percent. Likewise, the operating profit margin for Epson’s printer business fell from 13.7 percent in FY 2021 to 9.9 percent.
Rising a modest 0.4 percent, the operating profit for HP’s printing business stayed about the same in FY 2022 as the previous year. Maintaining flat profits was no mean feat, given that the firm’s supplies revenue sank 6.9 percent due to the sluggish demand for office supplies and sagging inkjet print volumes in the consumer segment. HP Printing’s operating profit margin rose from 18.1 percent in FY 2021 to 19.3 percent in FY 2022, giving the firm the highest operating profit margin of all the OEMs we cover. We credit HP’s improved profitability to the success of the firm’s subscription services, such as Instant Ink, which offer beefy margins.
Ninestar’s operating profit rose only 0.2 percent in FY 2022 to about $356.4 million. We estimate the company’s operating profit margin slipped from 10.8 percent in FY 2021 to 9.5 percent. Incidentally, Ninestar didn’t say much about its third-party supplies business, but it appears to have performed well with revenue and net profit rising 11.4 percent and 43.9 percent, respectively, in 2022.
A3 Vendors
Like printer vendors, most traditional copier manufacturers saw revenue grow last year as product availability improved. Net sales rose 16.7 percent to about $17 billion in Canon’s Printing Business during FY 2022, making it the second-biggest hardware vendor in terms of revenue that we followed. Canon attributed the strong growth to improved multifunction device (MFD) unit shipments, which increased 6 percent. Shipments of Canon’s laser printer units were also up 9 percent, and inkjet printer unit shipments increased 17 percent. Thanks to higher selling prices and a favorable exchange rate, the company reported a 30 percent uptick in revenue from office MFD hardware sales and 34 percent growth in both laser printer hardware revenue and inkjet printer hardware revenue.
While Konica Minolta’s company-wide results were marred by an enormous Q4 impairment loss, its Digital Workplace Business fared much better. After struggling with MFP and toner shortages in FY 2021, the group reported an impressive turnaround with revenue up 29 percent. It reduced its order backlog and boosted production capacity over the course of the year to drive up A3 MFP sales. While non-hardware sales still remain lower than FY 2019 levels, Konica Minolta’s revenue from office non-hardware sales improved last year compared to FY 2021.
Ricoh was one of the vendors hammered hardest by COVID-19, but the company continued its uphill march in FY 2022. Revenue from its digital services business was up 15.6 percent as Ricoh improved its supply of MFPs and trimmed its order backlog. The firm also implemented price increases and focused on selling value-added products while cutting costs to improve profits. However, Ricoh’s non-hardware sales remain depressed, reaching only 82 percent of FY 2019 levels.
The pent up demand for products has declined as backlogs have been cleared. The only way for firms to achieve robust growth will be through gaining market share, and that won’t be easy.
Growing 10.3 percent, Fujifilm’s Business Innovation group revenue also experienced a double-digit increase last year. The firm attributed the growth to higher sales of multifunction devices, printers and consumables in Japan and larger exports to the U.S. and Europe. It also had higher sales of multifunction devices in Southeast Asia.
Revenue from Xerox’s Print and Other business rose only 1.8 percent last year, which was the lowest year-over-year improvement of any of the copier OEMs we covered. After encountering shortages earlier in FY 2022, equipment sales improved dramatically during the second half, allowing total equipment sales to grow 2.7 percent. Although FY 2022 revenue from the sale of entry segment machines was down 0.7 percent and revenue from high-end equipment was down 3 percent, total equipment sales grew thanks to a 6 percent increase in midrange equipment sales. Post-sale revenue also improved 0.5 percent.
Sharp reports its MFP and consumables business as part of its 8K Ecosystem unit, which includes products such as TVs. Total revenue growth for the 8K Ecosystem group in FY 2022 was 4.3 percent, but Sharp reported sales of business solutions (which includes MFPs) were up 10 percent. Toshiba Tec’s Workplace Solutions also experienced a good rebuilding year with revenue up 19.6 percent last year. The firm said its MFP sales grew overseas as product availability improved. It also hiked prices, which improved Toshiba Tec’s top and bottom lines. Up 18.6 percent, Kyocera’s Document Solutions was another firm that experienced robust revenue growth.
Growing its profitability along with its revenue, Fujifilm’s Business Innovation operating profit improved 20 percent in FY 2022 compared to the year prior, and the firm’s operating profit margin came in at 8.3 percent. Kyocera managed to grow Document Solutions’ profits and profitability with its operating profit up 1.1 percent. Despite the modest gain, the firm’s full-year profit margin fell from 9.1 percent to 7.8 percent. Unfortunately, Kyocera offered little color about the performance of Document Solutions.
We noted that margins were squeezed last year at many firms. With its operating profit up a phenomenal 619.1 percent, Toshiba Tec’s Workplace Solutions business was the biggest winner, but the firm’s segment profit margin was a skinny 3.2 percent. Similarly, Ricoh Digital Services’ operating profit grew a robust 74.5 percent, but the segment’s operating profit margin was a slim 1.7 percent. Konica Minolta’s Digital Workplace unit’s operating profit saw a hefty $116.5 million improvement in FY 2022, moving into the black after sustaining an operating loss of $69.8 million in FY 2021. Its operating profit margin for FY 2022 was just 1.5 percent, however.
Not all vendors improved their profitability in FY 2022. The operating profit for Canon’s Printing Business declined 6.1 percent, and its operating profit margin sank from 11.6 percent in FY 2021 to 9.4 percent. The operating profit for Xerox’s Print and Other business fell 18.8 percent and its operating profit margin was down 3.2 percent. Sharp’s 8K Ecosystem operating profit tumbled 46.2 percent, which was the biggest year-over-year decline reported by the firms we follow. However, it looks as if the big factor in the segment’s profit decline was the TV business, and profits in the MFP business helped partially offset lower profits from shrinking TV sales and one-time expenses in the TV business. The 8K Ecosystem profit margin was 2.3 percent.
Our Take
Most companies were able to grow sales as product availability improved last year. While several firms managed to achieve robust bottom-line results, various factors combined to make profits more elusive. As was the case with most industries, copier and printer manufacturers faced inflationary pressures, especially in the U.S. and Europe. These pressures have continued and will tamp down vendors’ profitability this year. Moreover, we don’t expect to see a sudden surge in print volumes, so high-margin consumables sales are still likely to remain lackluster in FY 2023.
Market conditions will continue to be challenging into the second half of this year. It’ll be tough for many companies to replicate the double-digit revenue gains they achieved last year. The pent-up demand for products has declined as backlogs have been cleared. The only way for firms to achieve robust growth will be through gaining market share, and that won’t be easy. Although there may be some flexibility in pricing, steep discounts seem unlikely given the squeeze that margins are already feeling.
As FY 2023 unfolds, Actionable Intelligence will continue to report on OEM financial results as they’re reported and will continue to write quarterly summaries of OEM performances. The next one will be released soon. Stay tuned!
