HP beats Q3 expectations but printing revenue drops

Richard Stuart-Turner
Friday, August 28, 2020

HP Inc has posted financial results for Q3 that were ahead of its expectations, and only slightly down on last year overall, but revenue in its Printing division dropped by 20%.

Lores: "This quarter's results give me confidence in where we are headed"
Lores: "This quarter's results give me confidence in where we are headed"

The manufacturer reported revenue of $14.3bn (£10.8bn) for the period, down 2.1% on the $14.6bn figure recorded in Q3 2019.

Its Printing division recorded revenue of $3.93bn in Q3, down 20% from $4.91bn a year ago. The operating margin for the segment, which comprises supplies, commercial hardware and consumer hardware, was 12.2%.

HP’s Personal Systems division, which comprises workstations, notebooks and desktops, posted a revenue increase of 7% year-on-year, from $9.69bn to $10.36bn.

The company's net earnings fell from $1.18bn, or 79 cents per share, in Q3 2019, to $734m, or 52 cents per share in Q3 2020.

Printing segment profits fell by 37.3%, from $765m in Q3 2019 to $480m, while profits in Personal Systems climbed by 4.2%, from $547m to $570m.

The largest amount of sales in the Printing division was contributed by Supplies, which saw year-on-year revenue drop by 19% from $3.16bn to $2.57bn.

Commercial hardware sales slumped by 37% year-on-year, from $1.16bn to $732m, while consumer hardware climbed by 7%, from $588m to $628m.

In a webcast held following the publication of the results late yesterday (27 August), HP president and chief executive Enrique Lores said: “Our strong Q3 results in the face of unprecedented uncertainty reflects the agility of our teams and the strength of our portfolio.

“Our people have done a tremendous job, rapidly adapting to changing market conditions and driving disciplined execution and cost management.

“As a result, for the quarter we delivered beyond our expectations on revenue, earnings and cashflow. And we repurchased $1bn of shares, well ahead of prior levels.”

He added: “Importantly, we are navigating the environment well and capitalising on new opportunities. We are positioning ourselves to meet the evolving needs of our customers from the essential role of the PC in an era of dispersed workforces and classrooms to the rise of subscription-based business models and more personalised solutions.

“I consistently tell our teams that times like these are when strong companies get stronger. This quarter's results give me confidence in where we are headed. The strength of our strategy and operational capabilities will enable us to continue leading in both the print and PC category.”

Lores said that while commercial business segments such as graphics have been challenged due to business closures, HP has seen some “attractive pockets of growth”, and noted that labels and packaging saw impressions increase by 14% year-on-year.

HP returned $1.2bn to shareholders in the form of share repurchases and dividends in Q3.

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