Olympus profits hit by legal issues

LEHIGH VALLEY, Pa. – Olympus Corporation, which has its Olympus Corporation of America headquarters in Center Valley, Pa., reported that overall consolidated revenue increased 3.4 percent for the first six months of fiscal 2019 due to increased sales in the Medical Business and Scientific Solutions Business, but operating profit declined 92 percent.

Olympus posted the global results for a six-month period during which the United States economy continued to steadily recover against a backdrop of robust personal consumption, and Europe experienced a mild economic recovery amid improvement in the employment environment.

In China, a move toward recovery was seen due to the expansion of personal consumption. And in the Japanese economy, employment conditions continued to improve and capital investment remained in a growth trend amid strong corporate earnings, continuing the trend of moderate recovery.

Olympus’ operating profit’s year-on-year decrease despite revenue growth in the Medical and Scientific Solutions Businesses was due to a monetary settlement following litigation settlements, costs associated with the restructuring of the Imaging Business’s manufacturing locations, a provision for damages resulting from the judgment regarding a lawsuit involving a Chinese production subsidiary, and a provision for the estimated loss in relation to an investigation by the U.S. Department of Justice.

Medical Business Results

Consolidated sales in the Medical Business increased 5.7 percent year on year, while operating profit decreased 1.3 percent in the first half of fiscal 2019 compared to the previous year.

In the gastrointestinal endoscope field, although the mainstay endoscopy platform systems are reaching the second half of their product life cycles, steady sales were maintained. In the surgical field, the new “VISERA ELITE II” surgical endoscopy systems performed strongly while sales of the “THUNDERBEAT” integrated energy device continued to grow.

In the therapeutic devices field, sales of single-use products for use in endoscopic diagnosis and treatment of biliary and pancreatic ducts and others were strong. Operating profit in the Medical Business decreased due to the recording of an estimated loss in relation to an investigation by the United States Department of Justice.

Sales of gastrointestinal endoscopes in North America increased 6 percent in the first half of fiscal 2019, while sales of surgical devices increased eight percent compared to the first half of fiscal 2018. Endotherapy devices sales in North America were up 11 percent in fiscal 2019 compared to fiscal 2018.

Scientific Solutions Business

Consolidated revenue in the Scientific Solutions Business was up six percent in the first six months of fiscal 2019, while operating profit increased 122.8 percent year on year. Sales of products for hospitals and life science research were steady in North America and China.

Moreover, in addition to strong sales of industrial microscopes for semiconductor and electrical component inspection, sales of non-destructive testing equipment mainly to the petroleum gas and power generation markets increased overseas, leading to higher revenue year on year. Operating profit increased due to the increase in revenue.

In North America and China biological microscopes delivered solid performance.

Imaging Business

Consolidated revenue in the Imaging Business was down 16 percent year on year, while operating loss increased substantially compared with an operating profit in the same period of the previous fiscal year.

The Imaging Business’s revenue declined due partly to the impact of constraints on supplies of certain products in conjunction with the restructuring of manufacturing locations. As a result of a decrease in revenues and the recording of costs associated with the restructuring of manufacturing locations, an operating loss was recognized in the Imaging Business.

Looking Forward

The full-year forecasts for revenue, operating profit, and following profit items have been downwardly revised as a result of the recording in the six months ended September 30, 2018, of an estimated loss in Other Expenses in relation to an investigation by the U.S. Department of Justice, in addition to revisions to the year-end plan in response to the intensified competitive environment in the Imaging Business. 

Founded in 1919, Olympus has become a precision technology leader creating innovative 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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