EFI reports revenue decline in Q1 results

By Richard Stuart-Turner, Monday 24 April 2017

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EFI has seen its Q1 turnover fall by 2% compared to the same stage last year.

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EFI's Q1 turnover has fallen by 2% year-on-year

In its preliminary results released last week for the quarter ended 31 March 2017, the manufacturer said its revenue for the period was $228.7m (£178m), down on the $234.1m recorded in Q1 2016. Gross profit for the quarter, however, was up 4.4% from $118.4m in Q1 2016 to $123.7m.

The company reported Industrial Inkjet revenue in the period of $123.3m, down 2% year-on year, Productivity Software revenue of $35m, up 7.7% year-on-year, and Fiery revenue of $70.4m, down 7.2% year-on-year.

EFI chief executive Guy Gecht said: “We are obviously disappointed, in particular with the weakened Industrial Inkjet revenue, specifically related to our Vutek brand. This is taking away from our significant achievements this quarter, which include a return to double-digit growth at Reggiani, Nozomi beta progress and inkjet gross margin close to our targeted 40%.

“Unfortunately, this quarter we had an execution issue in our display graphic printer sales. As we discussed last quarter, with the successful combination of all Vutek roll-to-roll development and manufacturing with Matan in Israel, we are benefitting from the expertise of the combined technology teams along with significant cost efficiencies.

“The initial releases of our new 3m and 5m LED printers ended up with a higher demand than we forecasted and as a result we sold out of those printers.

“Normally when we launch new products we make a limited quantity in the first quarter of our release. With the benefit of hindsight it is clear that we should have pushed to build even more of the new products.”

While the strong sales of these machines helped to drive the firm’s Industrial Inkjet gross margin close to 40%, Gecht said the company didn’t sell enough of its more mature products – an issue it is focusing on rectifying in Q2.

Gecht added the Fiery revenue decline and Productivity Software revenue increase were both in line with the company’s expectations. “We are pleased with the integration of the Xerox Free Flow business and our partnership is performing on track. We see great benefit from being Xerox production DFE providers and believe this is a great win for Xerox and EFI and most importantly a win for our shared customers.

“The software segment has seen continued interest in our eco-system in our target industries. Our unique suite approach has gained traction with customers around the world and we continue to build our packaging and textile suites in order to offer a unique eco-system for each industry.”

Gecht added the company’s second Nozomi C18000 beta unit is currently being built and is on schedule for customer placement with a European print firm in June or July – the first beta unit of the single-pass corrugated press has already been installed at Spanish converter Rafael Hinojosa.

EFI has around 40 orders in hand for the Drupa-launched Nozomi C18000, Gecht said, and it is expecting to be producing the machines at a rate of around two per month by the end of the year.

“Our management commitment and my personal commitment is to improve execution and return to posting growth quarters,” said Gecht.

“We expect and accept nothing else from ourselves and are taking direct, targeted and necessary action to deliver as much to your and our own expectations.”

EFI will show its new Pro 16h production-level LED wide-format printer plus its Vutek 5r and Vutek FabriVU 520 printers at next month's Fespa, which will take place at the Hamburg Messe from 8-12 May.

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