Equities

Konica Minolta to Cut 2,400 Jobs to Boost Profit Amid Industry Shifts

Konica Minolta to cut 2,400 jobs, aiming for a ¥20 billion profit boost by April 2025, shares surge 5.9%.

By Bill Bullington

4/4, 03:28 EDT
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Key Takeaway

  • Konica Minolta plans to cut 2,400 jobs to boost profit by ¥20 billion ($130 million) in FY starting April 2025, shares up 5.9%.
  • The company is diversifying into healthcare and tech sectors amid declining demand for traditional office equipment.
  • Despite a more than 50% stock decline over five years, recent moves have spurred a 21% gain this year before the job cut announcement.

Job Cuts Announced

Konica Minolta Inc. has announced a significant reduction in its global workforce, planning to cut 2,400 jobs over the next twelve months. This decision is part of the company's strategy to enhance profitability through increased productivity, leveraging generative artificial intelligence. The job cuts are expected to boost the company's profit by ¥20 billion ($130 million) in the fiscal year starting April 2025. As of early last year, Konica Minolta had approximately 40,000 employees worldwide. The company's shares responded positively to the news, closing up 5.9% to reach a 10-month high.

Industry Shifts

The office equipment industry, particularly in Japan, is experiencing significant changes due to declining demand for printers and copiers as offices move towards paperless operations. Konica Minolta, along with other leading manufacturers like Canon Inc., Fujifilm Holdings Corp., and Ricoh Co., is navigating this shift by diversifying into other sectors such as healthcare, semiconductor production, and space technologies. Analyst Takashi Shimamoto of Okasan Securities highlighted the industry's consolidation trends, noting the potential for Konica Minolta to join ventures similar to Ricoh and Toshiba Tec's multifunction printer operations merger.

Historical Context and Stock Performance

Konica Minolta, with a history dating back to 1873, has evolved from its origins in cameras and photo materials to diversify into copiers and healthcare equipment. Despite this evolution, the company's stock price remains significantly lower than its levels in the 2000s, having declined more than 50% over the past five years. However, there has been a recent uptick in investor confidence, with the stock gaining 21% this year before the announcement of the job cuts spurred a further rally.

Management Faces Challenges

The job cuts and strategic refocusing come at a time when Konica Minolta and its peers are grappling with the dual challenges of evolving technology and changing market demands. The move to leverage artificial intelligence for productivity gains reflects the broader industry trend towards innovation and efficiency. However, the company must navigate these changes while managing the impact on its workforce and maintaining its competitive edge in a rapidly shifting landscape.

Street Views

  • Takashi Shimamoto, Okasan Securities (Neutral on Konica Minolta):

    "We are looking for signs of consolidation, such as Konica Minolta joining Ricoh and Toshiba Tec’s joint venture."