Olympus sees declines across the board in first half of fiscal 2021 - WFMZ Allentown

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TOKYO, JAPAN – That was ugly.

Olympus, which has its Olympus Corporation of America headquarters in Center Valley, PA., reported results for the first half of fiscal 2021 and every meaningful measurement was down.

The explanation is obvious. Olympus explained that the Japanese economy faced challenging conditions, as was the case for the global economy, due to the impact of COVID-19, despite showing signs of recovery in exports and personal consumption.

The company has been recording lackluster results for several years. In 2019, the Olympus Group announced its business transformation plan “Transform Olympus,” which aimed to develop itself as a truly global med-tech company. Based on this management strategy, the company has been carrying out activities toward sustainable growth.

Selection of and concentration on the corporate portfolio has been set as one of the core components for business growth and enhanced profitability. To this end, at the end of September 2020, the company divested its Imaging Business to a newly established wholly owned subsidiary of the company (the New Imaging Company).

In addition, the company concluded a final agreement with Japan Industrial Partners, Inc. concerning the transferal of 95% of the shares of the New Imaging Company to OJ Holdings, Ltd., a special purpose company established by JIP. Due to this, the Imaging Business has been classified as a discontinued operation from the second quarter.

Six Month Results

Revenue of the Olympus Group’s continuing operations for the six months ended September 30, 2020 decreased 14.1% year on year due to the decline in revenue in all businesses units due to factors such as limits on sales promotion activities because of COVID-19.

Operating profit (loss) of continuing operations was down 45.7% year on year, due to decreased revenue in all business units due to COVID-19, despite a reduction in selling, general and administrative expenses. Regarding foreign exchange, the yen appreciated against the U.S. dollar, the euro and the renminbi compared to the same period of the previous fiscal year.

Endoscopic Solutions Business

Consolidated revenue in the Endoscopic Solutions Business was down 12.0% year on year, while operating profit was down 29.7% year on year.

In April 2020 in Europe and Asia, and in July in Japan, Olympus introduced the new flagship endoscopic system EVIS X1. But due to the impact of COVID-19, postponement of gastrointestinal endoscopy was recommended, thus the number of procedures decreased. In addition, there were restrictions on sales promotion activities such as restriction of visits to medical institutions or postponement/cancellation of business negotiations. As a result, revenue in the Endoscopic Solutions Business declined.

Operating profit in the Endoscopic Solutions Business decreased mainly due to decreased revenue and the recording of expenses related to the voluntary recall of endoscopic products in the first six months of fiscal 2021 in cost of sales, despite the progress in cost efficiency.

Therapeutic Solutions Business

Consolidated revenue in the Therapeutic Solutions Business was down 15.8% year on year, while operating profit declined 32.9% year on year. Like the Endoscopic Solutions business unit, due to the impact of COVID-19, postponement of surgery was recommended by each academic society, the number of procedures decreased, and there were restrictions on sales promotion activities such as restriction of visits to medical institutions or postponement/cancellation of business negotiations.

As a result, revenue in the Therapeutic Solutions Business declined. Operating profit in the Therapeutic Solutions Business was down mainly due to decreased revenue and a decline in operating levels at manufacturing bases despite progress in cost efficiency.

Scientific Solutions Business

Consolidated revenue in the Scientific Solutions Business was down 19.0% year on year, while operating profit was down 95.9% year on year.

Olympus maintains that the electrical component and semiconductor markets in China have been on a recovery trend. However, overall, in addition to a reduced desire for capital investment in the aviation industry, restrictions on sales promotion activities including restrictions on visits to clients and delays and cancellations of business negotiations due to COVID-19 led to decreased revenue in the Scientific Solutions Business.

Operating profit in the business decreased mainly due to decreased revenue and a decline in operating levels at manufacturing bases despite the progress in cost efficiency.

Other Businesses

In other businesses, consolidated revenue declined 15.9% year on year. Due to the impact of COVID-19, revenue decreased in the animal-related business and the imaging component business following restrictions on sales promotions activities. Operating profit (loss) in other businesses improved due to cost reductions.

Founded in 1919, Olympus produces opto-digital solutions in the healthcare, life sciences and consumer products industries. Olympus Corporation of the Americas ( OCA ) – a wholly owned subsidiary of Olympus Corporation in Tokyo, Japan – was established in 1968 in Lake Success, New York. It is now headquartered in Center Valley, Pennsylvania with more than 5,000 employees in locations throughout North and South America.

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