Komori looking at M&A for growth

Strategic acquisition of distributors in India & China

Komori Lithrone G40

Japanese printing technologies provider Komori Corporation is looking to expand its footprint and market share inorganically – through the mergers and acquisition (M&A) route, it said in its 2020 annual report. “Currently, the printing industry is undergoing a shift as growth markets migrate from developed countries to China and elsewhere in Asia. As we aim to steadily seize opportunities arising from growing markets, we have acquired distributors and made them Komori Group members to secure our ability to accurately assess the latest needs of our customers, who seek increasingly sophisticated solutions,” the company said. “In this way, we strive to increase our market share. For example, in 2018, we acquired a distributor in India and, in 2019, we acquired one of two distributors in China, steadily enhancing our market presence in China and elsewhere in Asia.”

In February 2020, Komori signed a basic agreement concerning the acquisition of a 100% equity stake in the Germany-based MBO Group, a global company specialized in the manufacture and sale of post-press equipment, to make it a wholly-owned subsidiary. As of April 2020, it has completed the acquisition. “As such, we are endeavoring to make entries into new markets other than the printing machinery market via M&A,” the company’s annual report said.

Developing Asia main growth driver for print

Taking a look at printing industries worldwide, Komori said that the ongoing decline in demand for publishing-related printing and other print services is particularly profound in the developed countries due to the further popularization of digital media. Accordingly, demand for commercial printing has recently shown no growth in these countries. On the other hand, the printing markets in China and elsewhere in Asia are expected to expand due to consumer purchasing power growth.
Overall demand for package printing, which is essential to the sales of goods, remains especially robust, with China, India, and other Asian countries’ steadily growing, Komori said.

Meanwhile, Japan, Europe, the United States, and other developed countries have seen the gradual emergence of a new trend, with a shift from plastic to paper containers in the face of growing public calls to mitigate the environmental burden of packaging. “Taking these factors into account, we believe that the overall printing industry will eventually benefit from a modest growth curve over the medium to long term,” the company said.

Sixth Medium-Term Management Plan

In fiscal 2020, the first year of the Sixth Medium-Term Management Plan, Komori has classified its operations into three categories: ‘core’ (the offset printing press and security printing press businesses), ‘priority’ (the digital printing system (DPS) business), and ‘new’ (the printed electronics (PE) business).
“We have thus promoted initiatives to develop the core businesses to secure stable profitability while executing investment aimed at making the priority business profitable. We also endeavored to nurture new business over the medium to long term,” it said.

Severe Covid-19 impact

The Covid-19 pandemic outbreak is currently affecting many countries worldwide while seriously undermining real economies. As Komori’s overseas sales account for more than 60% of its consolidated net sales, the pandemic’s impact on operating results has been severe since the fourth quarter of fiscal 2020.

To counter the fallout from the pandemic and secure revenues amid this crisis, it has launched emergency measures to reinforce the business revenue structure. The emergency measures include reviewing existing operations, executing thoroughgoing cost reductions, promoting IT technologies, pushing ahead with workstyle reforms, strengthening organizational structure, reducing inventories and noncurrent assets, and
other initiatives to enhance management efficiency and improve profitability.

“In particular, we will focus on utilizing our ‘remote customer support’ system in such endeavors as the delivery of large machinery, the provision of services to customers in remote regions, and the quality assurance for printing machinery, in light of movement restrictions in place at home and abroad,” Komori said. The sales and service divisions will also employ a customer relationship management tool to continuously deliver full customer services.

“In sum, Komori business units handling these tasks are well-positioned to switch to tech-driven operations going forward. In addition, these emergency measures are not intended to be one-off activities. Rather, we aim to enhance management efficiency through these measures to solidify the foundation supporting our initiatives under the medium-term management plan,” the company said.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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