Xerox has announced its results for the first quarter of this year, showing revenues of US$ 1.67 billion, which is down 2.5% on last year’s Q1 figures of US$ 1.71 billion.
The company made a pre-tax loss of US$ 89 million, as against a profit of £ 53 million in 2021. Worse still, the gross margin fell from 35.8% to 31.8%. The earnings per share, according to Generally Accepted Accounting Practices, was a loss of US$ 0.38, down from last year’s US$ 0.18. The operating cash flow fell US$ 51 million year on year to US$ 66 million, while the free cash flow dropped US$ 50 million year on year to US$ 50 million.
For this first quarter, Xerox has split its figures into two segments. The Print and Other business segment earned revenues of US$ 1,550 millions, similar to 2021’s US$ 1,581 but recorded a loss of US$ 20 million down from last year’s profit of US$ 71 million. The Financing segment, which has been rebranded from Xerox Financial Services or XFS to FITTLE, had revenue of US$ 158 million, down from 2021’s US$ 180 million but showed a similar profit of US$ 17 million this year and US$ 18 million last year. The figures also include a negative charge of US$ 40 million (US$ 51 million last year), mainly from commissions and other payments made by the Financing segment to the Print and Other segment.
John Visentin, CEO and Vice Chairman of Xerox, commented, “Underlying demand for our products and services remains strong, as indicated by our growing backlog and growth in post-sale revenue. Broad-based inflationary pressure and increased logistics costs from supply chain disruption resulted in an operating loss, but we expect to offset most of these cost increases over time with price actions and additional Project Own It savings. We remain focused on executing the strategic roadmap presented at our Investor Day in February and are committed to monetizing our investments in new businesses in ways that maximize shareholder value.”
Strangely, Xerox has also assumed that the supply chain disruption that has affected most of the world’s economies as well pull out of the pandemic, will improve in the second half of the year. As far as I can see, most other companies and financial analysts are predicting this disruption will continue for at least another year, and possibly be longer and deeper as a result of the war in Ukraine. Nonetheless, Xerox believes it will benefit from staff returning to work in offices.
It’s difficult to read too much into this first quarter’s results. Xerox had a fairly terrible 2020 – the same as everyone else in the pandemic – but managed to recover in 2021. Most of its quarterly results from 2021 were negative but it had a strong second quarter.
You can find further details from xerox.com.
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