HP Incs sales to Personal Systems fell 24 shipments were

HP Inc.’s sales to Personal Systems fell 24%, shipments were reduced 28%

HP Inc., one of the top three personal computer vendors, has already reached the end of the first quarter of fiscal 2023 on its calendar, and related reports point to ongoing demand problems and overstocking in the PC segment. HP Inc. revenue in the most recent quarter fell 19% to $13.8 billion, while shipments of products in the Personal Systems segment fell 28%.

    Image source: HP Inc.

Image source: HP Inc.

The decline in sales in the PC segment was larger than expected by analysts, who had expected the company to generate $14.1 billion in revenue, which incidentally did not lead to a drop in HP Inc.’s share price. On the contrary, they rose a few percent as investors believed the downturn in the industry should be over soon. At least in an interview Bloomberg CEO Enrique Lores said the current fiscal year (ending in October) will improve both PC demand and profitability of HP Inc.’s business.

In November, the company announced plans to cut up to 6,000 employees and divest a number of properties to cut costs. According to HP Inc. management, these activities are already having a positive impact on the company’s profitability. Although the operating profit margin fell to 5.4% from 8%, it was higher than analysts had expected. Overall, the operating income of $1.4 billion was driven 36% by Personal Systems and 64% by Printing Equipment and Consumables, with the latter segment reporting an operating margin of 18.9%.

    Image source: HP Inc.

Image source: HP Inc.

The majority of revenue was still generated by Personal Systems (67%), where the company generated $9.2 billion, with the remaining 33% of total revenue coming from printing systems. Due to the high proportion of commercial personnel systems (47% of total sales), the company was better able to withstand the drop in demand for PCs, which was more pronounced in the client segment. Only 20% of HP Inc.’s quarterly revenue came from the client PC segment. Consumables accounted for 21% of the company’s sales. Printing equipment in the commercial segment accounted for 7% of sales, in the client – 5%.

In the Personal Systems area, sales were split 70:30 in favor of the commercial area. Here, revenue was down 24% year over year and 20% sequentially to $9.2 billion. On a quantitative basis, Personal Systems shipments were down 28%. In the consumer sector, they fell by 33% and sales by 36% compared to the same period last year. In the commercial segment, revenue was down 18% and product shipments were down 24%.

Across devices, HP Inc.’s press revenue declined 5% to $4.6 billion, of which 61% came from consumables, 24% from equipment sales in the commercial segment and 15% from the consumer segment. Sales of consumables fell 7% year over year, while shipments of printing units fell 2%. In the consumer sector, revenue from the sale of printing equipment fell by 3% and in the commercial sector by 2%.

According to Lores, it will take another quarter to two quarters to clear surplus products from the warehouses. By the end of the year, the capacity of the PC market will decrease by 18-19%, but the second half of the year will be better than the first. In the direction of equipment for printing documents, the company’s annual sales are expected to fall by 3% to 4%. At the end of the year, currency fluctuations are expected to reduce sales by around three percent.

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