Xerox is “on track” to deliver on its objectives for 2017 after taking a number of measures to strengthen its financial position.
Announcing the group’s third-quarter results, chief executive Jeff Jacobson said: “These are sound results that position us for continued improvement in Q4 and into 2018.”
The rate of revenue decline “modestly improved”, said chief financial officer Bill Osbourn. “Currency has been a headwind for some time, but we are beginning to see some improvement,” he added.
Overall sales fell by 5% – or 5.9% on a constant currency basis – to $2.49bn (£1.89bn), while adjusted operating margin was 12.2% (2016: 12.6%). Xerox beat its earnings target but missed revenue forecasts.
The firm reported strong demand for the new range of office printers introduced earlier this year, with the full benefits of the ramp-up set to flow through in future quarters.
At its high-end equipment business targeted at commercial printers, Xerox pointed to a good performance from the new Versant and its inkjet product line, although high-end colour device sales slipped by 11.8% to $97m compared to last year, which was boosted by Drupa.
The new white toner option for the iGen 5 was launched over the summer, and became commercially available this month.
Jacobson also said that he expected the company to benefit from the fact that the Palo Alto research facility was now 100% dedicated to Xerox, following the split from its former business process outsourcing operation, now named Conduent.
“We are expecting to do more on inkjet, on printed electronics, on the internet of things, and on packaging,” he said.
Osbourn said 2017 had been a year of optimising the group’s balance sheet, and it was “on track to deliver full-year expectations”.
The group has reduced capex by $50m but upped its M&A target by the same amount to $150m, and expects to complete a couple of “tuck-in” deals by the year-end.
Xerox will also re-state its 2014-2016 accounts and Q1 2017 figures due to accounting irregularities that were uncovered at the New Zealand and Australia operations of joint venture Fuji Xerox. Xerox has a 25% stake in Fuji Xerox.
Xerox’s share of the ¥40bn (£267m) accounting hit identified as a result of the probe is approximately $90m.
Xerox shares fell by 7.4% to $30.65 on the announcement.