Konica Minolta 2002 Annual Report Download - page 5

TO OUR SHAREHOLDERS 3Konica 2002
STRENGTHENING OUR COMPETITIVENESS THROUGH
SPEEDY MANAGEMENT
Strengthening our competitiveness through quick-acting man-
agement is Konica’s most urgent task in today’s rapidly evolv-
ing market characterized by intensifying global competition.
Realizing speedy management requires breaking away from
past concepts while launching drastic management reforms.
Highlighting Konica’s determination to achieve speedy man-
agement, the Company has formulated SAN Plan 2005, a new
medium-term management plan. Moreover, in April 2003
Konica will separate all of its business segments into
independent companies and establish a holding com-
pany that will own the equity in these companies.
There have been very few instances in Japan in
which business divisions have been spun off as
entirely autonomous businesses, as there are a host
of issues related to nurturing a corporate culture
essential for ensuring that the setting up of indepen-
dent companies successfully yields desired results. To pre-
vail in an age of mounting competition, Konica is
implementing dramatic management reforms with courage and
flexible management decision making capabilities. Before
explaining the specific details of SAN Plan 2005 and the estab-
lishment of business segments into separate companies, I will
review our business results for fiscal 2002.
REVENUES DOWN, PROFITS UP IN FISCAL 2002
Konica posted mixed results in fiscal 2002, as it recorded lower
sales but achieved growth in profits. Consolidated net sales
amounted to ¥539.6 billion, down ¥4.1 billion from the previ-
ous fiscal year. On the other hand, net income rose ¥4.6 bil-
lion, to ¥11.1 billion, owing to an improvement in net interest
expense that resulted from a reduction in interest-bearing debt
and the effects of exchange rates. Although we operated in a
persistently harsh environment, our performance benefited
somewhat from the effects of the weakening of the U.S. dollar
and the euro against the yen. Despite the rise in net income,
Konica is not satisfied with its actual business results for the
fiscal year.
By business segment, the Office Document Company, which
handles such products as copiers and toner, made a large con-
tribution to overall sales, posting a ¥12.2 billion rise in sales
from the previous fiscal year, to ¥186.3 billion, and a ¥5.1 bil-
lion increase in operating income, to ¥12.5 billion. Particularly
noteworthy was favorable sales of our highly acclaimed mid-
and high-speed digital copiers, which underpinned sales in this
segment. The Medical & Graphic Company reported a ¥2.0
billion decline in sales but registered a ¥1.5 billion increase in
operating income. This segment handles medical and printing-
use film and processing equipment.
On the other hand, the Consumer Imaging Company,
which carries out business in color film and printing
paper, continued to make important strides in trim-
ming costs. However, this company posted declines
in both revenues and income, with sales amounting
to ¥11.1 billion and operating income totaling ¥2.9
billion. These decreases are attributable to a con-
traction of the domestic market and increasingly
severe declines in prices. The EM & ID Business
Group, which handles CD and DVD pickup lenses and
triacetyl cellulose (TAC) film, recorded declines in revenues
and income, mirroring the effects of the global IT meltdown. In
our inkjet business, which was expected to experience firm
demand, our media business achieved steady growth during
the fiscal year. In the printer business, we placed top priority
on establishing core technologies and focused on the de-
velopment of new high-speed, high-quality printers in our
existing businesses. As a result, sales remained at the same level
as in the previous year, but operating income declined ¥0.8
billion.
KONICA LAUNCHES SAN PLAN 2005
In April 2002 Konica launched SAN Plan 2005, a new
medium-term management plan. Based on the watchwords
“Speed,” “Alliance,” and “Network,” the basic objectives of SAN
Plan 2005 are to reallocate Companywide resources and pro-
mote a shift toward growth businesses. Under this plan, we aim
to realize such management goals as raising our corporate value
in international markets and enhancing levels of satisfaction for
our shareholders, customers, and employees. Konica reviews
each SAN plan annually, and prior to SAN Plan 2005, we had
formulated SAN Plan 2003 and SAN Plan 2004, both of which