Konica Minolta Group Consolidated Financial Results Fiscal Year ended ...
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Konica Minolta Group
Consolidated Financial Results
Fiscal Year ended March 31, 2004
May 21, 2004
Konica Minolta Holdings, Inc.
Cautionary Statement
Cautionary Statement
The forecasts mentioned in this material are the results of
The forecasts mentioned in this material are the results of
estimations based on currently available information, and
estimations based on currently available information, and
accordingly, contain risks and uncertainties. The actual
accordingly, contain risks and uncertainties. The actual
results of business performance may sometimes differ from
results of business performance may sometimes differ from
those forecasts due to various factors.
those forecasts due to various factors.
IN THIS MATERIAL…..
Financial results for fiscal year ended March 31, 2004 include Minolta’s interim term
results, and those for fiscal year ended March 31, 2003 are aggregation of Konica
and Minolta.
Section 1
Financial results for fiscal year ended March 2004
Forecasts for fiscal year ending March 2005
Masanori Hondo
Senior Executive Officer
4
Highlight
[Billions of yen]
Mar 2003
Plan as of Nov 14
Minolta
1st half (a)
Konica Minolta
Full year (b)
[A}
(a) + (b)
Konica + Minolta
Full year [B]
Konica Minolta
Full year [C]
Net sales
263.2
860.4 1,123.5
1,087.2
36.3
1,133.2
-9.7
Gross income
117.3
361.5
478.7
472.7
6.0
---
---
Operating income
15.7
57.5
73.2
77.2
-4.0
66.7
6.5
Ordinary income
9.4
43.1
52.5
54.4
-2.0
51.0
1.5
Income before taxes
8.2
32.4
40.5
40.0
0.5
42.0
-1.5
Net income
6.8
12.5
19.3
29.1
-9.8
23.8
-4.5
EPS
[Yen]
24.27
26.48
36.39*
Mar 2004
[A] -[B]
[A] -[C]
[Yen]
Mar 2004
Mar 2003
Change
US$
113.1
122.0
-8.9
Euro
132.6
121.0
11.6
P/L
Foreign exchange rates
* Net income [A] / Average shares issued and
outstanding at the end of Mar 2004
Yen appreciation
Yen depreciation
5
Summary of business performance
Business Technologies (Core business) -- Continued to grow resulting from
the smooth shift to color and high-speed segments.
Optics (Strategic business) – Sales of lens units for digital cameras and
mobile phones with camera function increased. Special films for LCD
significantly grew as well.
Photo Imaging and Camera –Profitability declined. Fundamental restructuring
in process.
Most group companies in Japan and overseas completed management integration /
reorganization. The new integrated Konica Minolta brand was introduced.
Integration costs recorded, as anticipated, 17.6 billion yen in non-operating costs
and extraordinary loss, including 8.8 billion yen in SG&A .
Tax effects could not be posted due to the deficit in Photo Imaging and Camera
companies. This severely affected the bottom line.
(Impact to the bottom: 10.9 billion yen)
Operations
Operations
Integration
Integration
Adjustments of corporate tax
Adjustments of corporate tax
6
Highlight - Business segment
Net sales
[Billions of yen]
Operating income
[Billions of yen]
Mar 2004
Mar 2003
Change
Paln
as of Nov 14
Mar 2004
Mar 2003
Change
Paln
as of Nov 14
Business Technologies
618.8
594.7
24.1
624.6
62.9
52.6
10.3
52.4
Optics
85.9
54.1
31.8
79.1
15.3
12.4
2.9
12.7
Photo Imaging
146.9
163.1
-16.2
147.0
-0.3
8.3
-8.6
4.0
Camera
131.3
117.6
13.7
146.2
-6.4
2.1
-8.5
0.0
Medical & Graphic
125.6
117.4
8.2
120.0
7.9
9.3
-1.4
9.0
Sensing
9.7
9.7
0.0
10.4
1.8
2.0
-0.2
1.9
Holdings, others
5.4
30.6
-25.2
5.8
-7.9
-9.5
1.6
-13.3
Total
1,123.5
1,087.2
36.4
1,133.2
73.2
77.2
-4.0
66.7
Note: Classification of segment information used in this material is slightly different from that of “Kessan-Tanshin”.
7
Impact of foreign exchange -- Business segment
[Billions of yen]
Net sales Operating income
Business Technologies
-3.6
8.5
Optics
-1.0
-0.8
Photo Imaging
-2.7
-1.8
Camera
-0.5
3.6
Medical & Graphic
-2.7
-0.6
Sensing
-0.1
-0.1
Holdings, others
0.0
0.0
Total
-10.6
8.8
US$
approx. 0.7 billion yen
Euro
approx. 1.1 billion yen
Impact to operating income if changing 1 JPY
Comparison with the previous year
Note: Exchange rates used for calculation -- Average annual forex for FY ended March 2004
8
SG&A analysis – Mar 2004 vs. Mar 2003
[Billions of yen]
Mar 2003
Mar 2004 increase/decrease
395.5
405.5
10.0
Sales promotion
18.4
-2.6
Advertising 25.6
5.1
Salaries and wages
166.5
3.6
Depreciation
12.2
2.3
Consolidation goodwill
2.9
2.9
Other sales promotin
116.9
-9.9
R&D
63.0
8.6
Integration cost in SG&A --- 11.2 billion yen including 2.4 billion yen for goodwill
amortization and 8.8 billion yen for other expenses.
9
Non-operating income / expense analysis
– Mar 2004 vs. Mar 2003
[Billions of yen]
Mar 2003
Mar 2004 Incerease/decrease
-22.9
-20.7
2.2
Interest expenses
-6.2
3.6
Foreign exhange loss
-5.0
0.4
-8.0
1.6
Other
-1.5
-3.4
Disposal/valuation losses of
inventories
Integration costs in non-operating income/ expenses --- 3.1 billion yen
10
Extraordinary profit / loss analysis
[Billions of yen]
March 2004
Gain on sale of securities
0.1
Loss on disposal of assets
-3.5
Valuation loss on of securities
-0.6
Adjustment on return of entrusted portion of
employee pension fund
-1.5
Integration costs
-5.8
Other
-0.7
Total
-12.0
Extraordinary profit / loss for fiscal year ended March 2003: -14.3 billion yen
11
Business Technologies
568.2
618.8
594.7
0
200
400
600
Mar 2002
Mar 2003
Mar 2004
23.3
62.9
52.6
0
20
40
60
Mar 2002
Mar 2003
Mar 2004
Overview
Overview
MFP and LBP businesses expanded due to the improved product-mix by
adding color and high-speed models.
MFP
Color MFP: Sales increased by strengthening product lineup in mid- and high-speed segments.
(Y-O-Y : approx. 80% points up, unit base)
B/W MFP: Profit increased due to the accelerating shift to high-speed segments.
(Y-O-Y: approx. 10% points up in Seg.4 and above, unit base)
LBP
Low-speed desk-top (A4 size) color LBP: Sales remained strong, especially OEM.
(Y-O-Y: approx. 40% points up, unit base)
Consumables: Began to generate profits resulting from the increasing number of machine in the field.
Net sales
Operating income
[Billions of yen]
[Billions of yen]
12
Optics
44.5
85.9
54.1
0
20
40
60
80
100
Mar 2002
Mar 2003
Mar 2004
7.1
12.4
15.3
0
5
10
15
20
Mar 2002
Mar 2003
Mar 2004
Overview
Overview
Almost all businesses showed considerably favorable performance compared
with the previous year thanks to the advantages brought by the integration.
Optical pick-up lenses
Favorable performance, especially lenses for DVD
(Y-O-Y: approx. 20% points up, unit base)
Lens units for digital cameras
Significant sales increase by developing new major accounts
(Y-O-Y: approx. 35% points up, unit base)
Lens units and camera units for mobile phones
Sales of lens units for high-resolution / high-value-added models for Japanese manufactures
steadily increased.
Films for LCD
Sales of thin films for lap-top PCs increased. (Y-O-Y: approx. 50% points up, unit base)
Net sales
Operating income
[Billions of yen]
[Billions of yen]
13
Photo Imaging and Camera
Overview
Overview
Overall business deteriorated due to the intensified price competition
and the drastic change of the market. Aim for recovery by undertaking
fundamental restructuring in 2004.
Photo Imaging
Color films: Sales declined by 20% points due to the falling demand in Japan, US and Europe. Overall
photo imaging business performance declined.
Photo paper: Sales steadily increased thanks to the expansion of digital lab sales
Inkjet paper: Sales, especially in high-quality paper, increased more than the market growth rate.
Camera
Digital cameras: Sales doubled Y-O-Y on unit base, however, profitability drastically declined due to the
severe price competition in the market.
Net sales
Operating income
[Billions of yen]
[Billions of yen]
154.6
163.1
146.9
127.8
117.6
131.3
0
50
100
150
200
250
300
Mar 2002
Mar 2003
Mar 2004
5.6
2.1
-6.4
8.3
-6.4
-0.3
-10
-5
0
5
10
15
Mar 2002
Mar 2003
Mar 2004
Photo
Imaging
Camera
Photo
Imaging
Camera
14
Medical & Graphic and Sensing
118.8
117.4
125.6
0
30
60
90
120
Mar 2002
Mar 2003
Mar 2004
10.9
9.3
7.9
0
2
4
6
8
10
12
Mar 2002
Mar 2003
Mar 2004
9.1
9.7
9.7
0
2
4
6
8
10
Mar 2002
Mar 2003
Mar 2004
0.9
2.0
1.8
0
1
2
3
Mar 2002
Mar 2003
Mar 2004
Overview
Overview
Medical & Graphic
Medical: Generated stable profit. Sales of digital X-ray imaging systems remained strong. Sales of dry-film
type systems increased.
Graphic: Sales as well as profit in films and paper declined due to the falling demand in the market.
Sensing
Light source color measurement systems used for lap-top PC’s display: Sales continued to show
steady growth.
Net sales
Operating income
[Billions of yen]
Net sales
Operating income
[Billions of yen]
Medical & Graphic
Sensing
15
Integration costs – March 2004
1st half
2nd half Full year
SG&A
1.5
7.3
8.8
Non-operating expenses
2.0
1.1
3.1
Extraordinary losses
0.1
5.6
5.8
Total
3.6
14.0
17.6
Plan as of Mar 19
SG&A
12.6
5.4
Total
18.0
Non-operating expenses /
Extraordinary losses
Relocation of operational sites, moving
subsidies, integration of IT, advertising,
other
Due to the change of accounting policy
Rationalization of human resources, other
[Billions of yen]
Note: Goodwill amortization of 2.4 billion yen is not included in the above charts.
16
92.0
93.4
20.7
21.5
101.4
98.7
226.4
220.2
55.8
55.2
184.2
173.9
224.4
223.0
89.5
83.7
0
200
400
600
800
1,000
Sep 30
Mar 31
Investments and others
Other intangible fixed assets
Consolidation goodwill
Tangible fixed assets
Other current assets
Inventories
Notes and accounts receivable
Cash and deposits
B/S - Assets
Tangible fixed assets:
- 6.2 billion yen
Inventories:
- 10.2 billion yen
Cash and deposits:
- 5.8 billion yen
994.5 billion yen
969.6 billion yen
Change:
- 24.9 billion yen
[Yen]
Mar 2004 Mar 2003 Change
US$
105.7
111.3
-5.6
Euro
128.9
129.2
-0.3
B/S
Exchange rates
Yen appreciation
Yen appreciation
17
338.4
336.6
214.1
223.2
304.6
268.0
137.4
141.8
0
200
400
600
800
1,000
Sep 30
Mar 31
Minority interests and shareholders' equity
Other current liabilities
Interest bearing debts
Notes and accounts payable and other current liabilities
B/S – Liabilities and shareholders’ equity
Interest bearing debts:
- 36.6billion yen
Notes and accounts
payable:
+ 4.4 billion yen
994.5 billion yen
969.6 billion yen
Change:
- 24.9 billion yen
[Yen]
Mar 2004 Mar 2003 Change
US$
105.7
111.3
-5.6
Euro
128.9
129.2
-0.3
B/S
Yen appreciation
Yen appreciation
Exchange rates
18
Cash flows
[Billions of yen]
Mar 2004
Mar 2003
Change
Income before income taxes
40.5
40.0
0.5
Depreciation and amortization
55.6
53.8
1.8
Increase (decrease) of working capital
-10.0
51.7
-61.7
I. Net cash by operating activities
86.1
145.5
-59.4
II. Net cash by investment activities
-31.9
-52.6
20.7
I.+ II. Free cash flow
54.2
92.9
-38.7
Increase (decrease) in debts and bonds
-48.3
-90.1
41.8
Dividends paid
-5.3
-3.6
-1.7
Others
-1.7
-0.4
-1.3
III. Net cash by financing activities
-55.3
-94.1
38.8
19
207.4
239.6
200.5
176.1
173.9
2.4
2.9
2.3
1.9
1.9
0
100
200
Mar 2000
Mar 2001
Mar 2002
Mar 2003
Mar 2004
0.0
2.0
4.0
Interest-bearing debts and inventories
409.6
418.2
416.1
322.8
268.0
0
100
200
300
400
Mar 2000
Mar 2001
Mar 2002
Mar 2003
Mar 2004
Interest-bearing debts
Inventories and inventory turnover
[Billions of yen]
[Billions of yen]
[Months]
Inventories
Turnover
Inventory turnover (months) = Average inventories / (Net sales /12)
20
Forecasts March 2005 -- Actions
1.
Expand business and strengthen profitability by concentrating management resources
on Business Technologies and Optics businesses
2.
Undertake fundamental business restructuring in Photo Imaging and Camera
businesses to restore profitability
3.
Promote human resources integration and generate rationalization effects and
management integration synergies.
4.
Promote new Konica Minolta brand
Key actions for the year
Key actions for the year
Fiscal Year ending March 2005
Fiscal Year ending March 2005
Consolidate Management Foundation
Consolidate Management Foundation
21
Forecasts March 2005
US$
105 yen
Euro
127 yen
Projected foreign exchange rates for
fiscal year ending March 2005
[Billions of yen]
Results
1st half
2nd half Full year
Mar 2004
Net sales
550.0
600.0 1,150.0
1,123.5
Operating income
33.5
51.5
85.0
73.2
Net income
9.5
20.5
30.0
19.3
Investments
(excluding lease equipment in Business Technologies)
63.0
Depreciation and Amortization
58.0
R&D
71.0
Forecasts -- Mar 2005
22
Forecasts March 2005 – Actions by business segment
Business Technologies
Business Technologies
Promptly materialize management integration effects
Strengthen marketing, especially direct sales, and launch timely new
color / mid- to high-speed MFPs.
Optics
Optics
Solidify the top market share in pick-up lens for DVD
Expand lens unit and micro lens unit businesses
Expand electric material business and increase profitability by strengthen
the marketing of special-function films
Photo Imaging /
Photo Imaging /
Camera
Camera
Film / photo paper business – Drastic cost reduction by improving
production efficiency. Expand inkjet paper sales
Digital cameras – Shift to high-value added products and reduce costs
Reduce sales costs by taking advantage of the integration of Photo
Imaging and Camera companies
Medical & Graphic
Medical & Graphic
Medical – Promote dry film sales by expanding digital X-ray imaging
systems sales
Graphic – Promote digital proofing systems business and magnify
overseas market share
Overall – Promote overseas sales (Plant in China: Established Mar.
2004, Marketing company in Europe: Established Apr. 2004)
Sensing
Sensing
3D digitizers --Expand business in the industrial measurement field
Color measurement: Promote sales in the car and FDP industries
23
Forecasts March 2005 – Breakdown by business segment
[Billions of yen]
Results
1st half
2nd half
Full year
Mar 2004
Net Sales
Business Technologies
285.0
315.0
600.0
618.8
Optics
45.0
55.0
100.0
85.9
Photo Imaging*
150.0
154.0
304.0
278.2
Medical & Graphic
65.0
70.0
135.0
125.6
Sensing
5.0
6.0
11.0
9.7
Holdings, others
0.0
0.0
0.0
5.4
Total
550.0
600.0
1,150.0
1,123.5
Operating income
Business Technologies
24.0
36.0
60.0
62.9
Optics
8.5
10.0
18.5
15.3
Photo Imaging*
-1.5
1.5
0.0
-6.7
Medical & Graphic
3.5
5.0
8.5
7.9
Sensing
1.0
1.0
2.0
1.8
Holdings, others
-2.0
-2.0
-4.0
-7.9
Total
33.5
51.5
85.0
73.2
Forecasts - Mar 2005
*“Photo Imaging” = Photo Imaging + Camera
24
Forecasts March 2005 – Integration costs
[Billions of yen]
Plan
1st half
2nd half
Full year
As of Mar 19
SG&A
4.6
3.8
8.4
12.0
Non-operating expenses
2.5
2.5
5.0
Extraordinary losses
2.2
2.1
4.3
Total
9.3
8.4
17.7
20.0
Forecasts - Mar 2005
8.0
Note: Goodwill amortization 4.9 billion yen will be posted separately.
Section 2
Business Technologies Strategies
Fumio Iwai
President & CEO
26
Konica Minolta’s business portfolio
0%
10%
20%
30%
Market g
r
o
w
th
Operating income ratio
Business
Technologies
Optical
devices
Sensing
Medical &
Graphic
Core business
Strategic business
Businesses with
stable profits
Photo
imaging
Camera
Transforming
businesses
0%
-5%
10%
20%
Optics
will continue to expand, and become a
secure source of profits together with Business
Technologies.
Business Technologies
will continue to grow as
a core business.
Photo Imaging, Camera, and Medical &
Graphic
will focus on securing profits rather than
expanding business size while quickly developing
new businesses to respond to the advancing
digitization and the shrinking film market.
Sensing
will focus on maintaining high profitability
while magnifying business
Group’s Medium Term Targets
Result
Mar 2004
Mar 2005
Mar 2006
Mar 2007
Net sales
1,123.6
1,150.0
1,230.0
1,330.0
Operating income
73.2
85.0
145.0
160.0
Plan
[Billions of yen]
27
Medium term business targets
CORE BUSINESS
Expand operations, and generate profits and cash flows while
establishing a solid position in the top group of the industry
Targets
Concentrate management resources [ 2004 – 2006 ]
Approx. 50% of Group’s management resources
Investments – Approx. 100 billion yen for strengthening sales channels, installing new
polymerization toner facilities, and reinforcing production in China
IT investments – Preferentially allocate Group’s resources to Business Technologies to
promptly establish the integrated manufacturing-marketing IT system
R&D investments – Approx. 100 billion yen for enhancing polymerization toner development,
strengthening solution development capabilities, and developing next-generation color models
Result
Mar 2004
Mar 2005
Mar 2006
Mar 2007
Net sales
618.8
600.0
680.0
740.0
Operating income
62.9
60.0
90.0
103.0
Plan
[Billions of yen]
28
Business environment
The competition in the business technologies field is anticipated to
intensify due to the acceleration of technology innovations and the
diversification of customer needs.
Changes in
Market
Acceleration of digitalization
Expansion and
diversification of network
Increase and diversification
of information
Diversification of customer
needs
Globalization
Borderless
Need more sophisticated
product development and
technologies
Need enhanced
competitiveness to acquire a
top position
Changes in
Technologies
Changes in
Competition
Companies worldwide
compete without barriers of
any business types
(= Mega-competition)
29
50.0
110.0
175.8
214.2
618.8
989.7
1,557.6
2,273.9
-
1,000
2,000
3,000
G
F
E
D
Konica Minolta
C
B
A
Competitors (positioning in the industry)
Konica Minolta broke out of the
lower group, however, there
remains significant gap
between Konica Minolta and
the top group.
Concentrate on Konica Minolta’s
strength
“Genre top” categories / fields:
Color MFP, high-speed MFP, color LBP…
Magnify operations by propelling
strategic alliances
Top Group
740 billion yen
in FY2006
Sales comparison with competitors
Fiscal year ended March 2004
Sales comparison with competitors
Fiscal year ended March 2004
[Billions of yen]
Note: Competitors’ net sales are those of their
respective business equipment-related divisions.
Source: Konica Minolta
30
Konica Minolta’s profile
LBP
95 billion yen
MFP
523.8 billion yen
45%
55%
B/W
78%
Color
22%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
20%
53%
12%
15%
US
31%
Europe
28%
Japan
10%
Others
31%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
88%
12%
B/W
84%
Color
16%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
US
46%
37%
Europe
28%
35%
Japan
15%
19%
Others
11%
9%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
LBP Color ratio
LBP regional breakdown
MFP Color ratio
MFP regional breakdown
Konica Minolta is far
advanced in colorization.
Larger sales in Europe
including OEM
Below the market
colorization level due to
the relatively small
business in Japan
Exhibits almost the same
proportion as the market
Note: Konica Minolta = Results fiscal year ended March 2004
Market = Source by Konica Minolta
31
“Genre top” strategy -- Primary business areas for growth
Note: Konica Minolta = Results fiscal year ended March 2004, unit base
Market = Source by Konica Minolta, unit base
40%
47%
13%
US
25%
Europe
23%
Japan
52%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
64%
23%
13%
US
67%
Europe
17%
Japan
16%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
26%
65%
9%
US
37%
Europe
43%
Japan
20%
0%
20%
40%
60%
80%
100%
Market
Konica Minolta
Color MFP
High-speed MFP
for production printing
B/W Seg.5 and above, Color Seg. 4
Color LBP
Strong sales in US and Europe
Increasing sales including
OEM in US
Strong sales including OEM
in Europe
32
“Genre Top” strategies
Concentrate management resources on the promising areas and
establish a solid position there
Color MFP
Become one of the players in the top group
Market share target for fiscal year ending March 2007: 20%
High-speed MFP
Establish a solid position in the production printing field by reinforcing high-speed MFP (color, B/W)
business
Sales target for fiscal year ending March 2007: 60 billion yen
Color LBP
Solidify the leading position in the desk-top color LBP field
Market share target for fiscal year ending March 2007: 30%
33
“Genre Top” strategies – Market share development
Japan
3.9% 4th
2.2% 5th
2.0% 5th
Large gap between Konica
Minolta and the top group
Color MFP
US
10.8% 3rd
12.0% 3rd
12.7% 4th
Aim for the top
Germany
18.3% 2nd
29.2% 1st
23.4% 1st
Further expand market share
Japan
8.5% 4th
9.6% 4th
13.9% 4th
Efforts to expand market
share
US
14.7% 2nd
14.6% 2nd
15.0% 2nd
Further expand market share
Germany
24.3% 1st
29.7% 1st
30.3% 1st
Consolidate the #1 market
share
Japan
9.7% 3rd
19.7% 2nd
21.9% 2nd
Western
Europe
22.0% 2nd
28.8% 2nd
30.8% 2nd
Desk-top
Color LBP
B/W MFP
Seg. 4
#1 market share in low- to
mid-speed models.
Expand market share by
launcing tandem machine
FY 2001
FY 2002
FY 2003
Note: Color LBP --- European markets include OEM
34
Color MFP – Mission and tactics
Become one of the top three players in the color MFP field
Sales target of Color MFP for fiscal year ending March 2007: More than 130,000 units
Mission
Tactics
Promote replacement of B/W with Color and achieve “big share revolution” in the
industry
Enhance high image quality with polymerization toner and color image processing technologies. Expand
sales by promoting TOC advantages
Provide the most enhanced product lineup in the industry including color products with substantial
features, equivalent to B/W models
Provide solutions and promote services
Provide document work flow tailored to the customers’ individual needs by enhancing both input/output hardware
and software
Promote comprehensive cost reduction
Achieve efficiency in R&D, procurement and purchasing by taking advantages of the integration, and develop
cost-effective new products
FY 2003
FY 2006
Color MFP
Worldwide market share,
unit base
130,000
units
34,000
units
20%
15%
Seg 2 and above
4th
Top 3
35
[Reference]
Development of Color MFP market
0
200
400
600
800
1000
2003
2004
2005
2006
Others
Japan
Europe
US
Projection of worldwide Color MFP market
Colorization will rapidly advance against the slow growth of the MFP market including B/W
MFPs.
[1,000 units]
Source: Konica Minolta
36
High-speed MFP – Mission and tactics
Establish a solid position in the light production printing field
Sales target for fiscal year ending March 2007: More than 60 billion yen
Mission
Tactics
Full-scale entry with high-speed color models and B/W Seg.6 models
Enhanced product lineup suitable for professional use
Expand light production printing sales in US and Europe followed by the sales expansion in Japan
Establish dedicated sales force in the major overseas marketing companies to strengthen sales solutions
Magnify sales by utilizing Business Technologies and Medical & Graphic companies
through their respective sales channels
Cultivate sales channels by aggressively developing OEM business
FY 2006
Net sales
60 billion yen
Operating income
12 billion yen
Monthly copy volume
Street Price
1,000,000
500,000
$60,000
200,000
$30,000
100,000
$20,000
50,000
$16,000
20,000
Production printing
Xerox
Heidelberg
Canon
Canon
Xerox
Ricoh
Office
Light printing
Full scale entry to
light printing
market with B/W
Seg. 6 and Color
51ppm models
FY2003
Net sales
10 billion yen
Operating income
3 billion yen
37
[Reference]
Development of light production printing (POD) market
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2003
2004
2005
2006
Japan B/W
Europe B/W
US B/W
Japan Color
Europe Color
US Color
Projection of light production printing market, value base
Significant growth of light production printing in high-speed B/W and Color fields
Note: Values include hardware, consumables and service
(Million $)
38
Color LBP – Mission and tactics
Increase profits on a consolidated basis by solidifying the top position
in the desk-top (A4 size) color LBP filed
Generate greater profits in consumables business by increasing the number of LBPs in the field
Operating profit target for fiscal year ending March 2007: Aim for more than 10 billion yen
Mission
Tactics
Strengthen and expand own brand business
Strengthen retailed outlets (IT distributors, e-commerce, MFP sales channels)
Reinforce business in China, Japan and Eastern Europe
Increase profits in consumables by expanding products with polymerization toner
Tactics focusing on consumables marketing
Introduce color products with enhanced features and increase competitiveness by
continuous cost reduction
(1) Low-speed color LBPs (2) LBPs with tandem engine (3) All-in-one LBPs
95 billion
yen
250,000
units
544,000
units
Color LBP
FY 2003
FY 2006
Worldwide
market share,
unit base
25%
30%
Net sales
Operating
income
FY 2003
2.8 billion
yen
11 billion
yen
130 billion
yen
FY 2006
39
[Reference]
Development of color LBP market
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2003
2004
2005
2006
US
Europe
Japan
Others
A4
A3
A4
A4
A4
A3
A3
A3
Color LBP market
Continuous growth is anticipated in Color LBP market, especially in desk-top (A4 size) segment
[1,000 units]
Source: Konica Minolta
40
Distinctive advantages of Konica Minolta’s
polymerization toner
By March 2006, achieve #1 position in the polymerization toner industry by leveraging
technological advantages and loading aggressively polymerization toner into products
Realize high-definition and high-quality printing, especially in color
Overwhelming number of patent (approx. 660 cases)
Largest production in the industry reinforced by the new plant that will be established in 2005. (Anticipated
production : 8,000 tons per year)
Widest product lineups in the industry in various categories; MFP and LBP, in B/W and color, from mid-&low-
speed to high-speed
Polymerization toner has a number of technological
advantages. MFPs and LBPs, especially color
models loaded the toner can be greatly
differentiated from other products.
Advantages
Benefits
Small particles
High-definition
Low cost
Highly uniform size and
shape
Low volatility in image quality
Easy to control
Possible to apply unique
layers to particles
Low glare, easy to write on,
improve machine reliability,
longer product life
Low heat fixing
No curling, short start-up time,
downsizing of heaters and
cooling fans, low noise, energy-
saving, low cost
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2000
2001
2002
2003
2004
2005
2006
Others
D
C
B
A
Konica Minolta
[tons]
Polymerization toner production by manufacture
41
Enhancement of power by management integration
-- R&D, manufacturing, and marketing --
R&D
Gather R&D teams at Atsugi Site in the first half of fiscal year ending March 2005 to develop
software tailored to customers
Eliminate duplicated functions caused by the geographically dispersed labs, and improve R&D power
and speed in order to promptly respond to customer needs
Strengthen production printing business -- Establish flexible software development system to provide
individually tailored software to customers
Manufacturing and procurement
Increase production efficiency by commencing operation at
the new polymerization toner plant in 2005
Generate the economy of scale by centralizing procurement
and review vendors
Expand in-house production of key devices
Strengthen production in China
Aim to reduce costs by
more than 20 billion yen
in 2005
(Comparison with 2003)
Marketing
Establish enhanced direct sales system by completing management integration at the major
marketing companies in Japan, US and Europe
Rationalize back-office function by integrating sales offices and IT systems
Introduce the new brand of MFP product line, “bizhub”
42
Enhancement of power by management integration
-- Comprehensive strength --
Establishment of business foundation that realizes flexible and prompt response to
the borderless customer needs between MFP and LBP
Growth in both MFP and LBP
Marketing of all products with “OWN brand” through “OWN worldwide sales network” without relaying
on OEM sales channels
LBP and MFP controller development enhanced by the management integration
Knowledge that realizes low-cost product development for LBPs and high reliability in high-speed
MFPs
Wide-ranging sales channels from volume retailers, business equipment dealers, IT-related products
dealers to production printing
Market-leading polymerization toner
Rapidly increase profits in the consumables business by providing a wide range of products loaded
polymerization toner
Intensive investment in R&D and manufacturing of polymerization toner aiming for further
improvement of production efficiency
OEM business in strategic areas
Expand business opportunities by promoting strategic alliance with major OEM customers
43
New brand
Konica Minolta’s new brand for MFPs
New brand name:
“business + hub”
A compound world of “biz” from business and “hub”.
“Hub” means a center of activity, interest or networks -- a focal point.
Concept:
“bzhub puts you at the hub of your business”
The concept of “buzhub” is to put business people at the
hub of their business.
44
New product lineup with new brand
Start launching new products with “bizhub” in Spring 2004 worldwide
Introduce 20 models with “bizhub” from 2004 to 2006
Color: 22 ppm
B/W: 35 ppm
B/W: 35 ppm
