Japanese multinational technology company Konica Minolta has issued a revised forecast for FY21-22. While the Tokyo-headquartered company revised its sales forecast up by ¥10 billion ($76.93 million) to ¥910 billion ($7.01 billion), it expects to file a loss of ¥23 billion ($177 million).
The ¥32 billion ($246.5 million) reversal was due to the damaging losses of ¥10.9 billion ($83.9 million) on past acquisitions which includes ¥1.5 billion ($11.5 million) related to Konica Minolta Marketing Services EMEA (KMMS EMEA) which now trades as Indicia Worldwide, a London-headquartered insight and technology led communications agency with global production expertise in over 35 countries with hubs in Asia Pacific, EMEA, and North America.
Company sources state that profitability of KMMS EMEA has declined due to diminishing demands for print procurement support services due to shift of consumer behaviour towards online purchasing and reduction in in-store campaigns and in-person events run by client companies because of the prolonged COVID-19 pandemic. KMMS EMEA owed Konica Minolta £58.8 million ($73 million) at the balance sheet date.
“We had actually finalized our painful restructuring, repositioning, and rebranding initiative by March 2020, just before the pandemic hit the western world, winning a ton of big new brands and exceeding monthly financial targets, focusing on a strategy to combine market activation campaign efficiency with data-driven ROI effectiveness,” explains Yves Rogivue, Global CEO at Indicia Worldwide.
In its financial update, Konica Minolta said that other goodwill write-offs related to the acquisition of MOBOTIX AG, a German manufacturer of video surveillance systems with an impairment loss of ¥5.8 billion ($44 million) and at its IoT solutions unit with loss amounting to ¥3.5 billion ($26.9 million).
As part of its healthcare business, accounts receivables are expected to decrease by about ¥9.2bn ($70 million), while operating profits are expected to be around ¥11.5 billion ($88.5 million) lower than forecasted.
The company said that it expected to breach one of its financial covenants in its syndicated loan agreement as a result of the downgrade. Konica Minolta’s share price has also fallen sharply, down nearly 8% to ¥446 ($3.43) on the announcement with the shares previously dipping to a 52-week low in early February to ¥440 ($3.39).
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