Government contract boosts profits at Fuji Xerox
Despite the low margins on the government printing and photocopying contract, winning the work has helped lift Fuji Xerox's profits to new records.
The office products company has revealed a normalised profit of $6.3 million for the financial year ending March 31, double last year's $3.2 million.
Broken down between its two business units, office products recorded unaudited revenue of $215.5 million - up 9.1% on the previous year.
And the finance unit recorded revenue of $93 million, up 16.8% on the year earlier.
The government commands about a third of the overall market for printers and other office products.
So winning the government tender last year awarded Fuji Xerox a sizeable chunk of new business - worth $37 million that year alone.
Fuji Xerox managing director Neil Whittaker says government work is now worth 30% of its business.
But the margins are low as the government seeks to put the squeeze on costs.
"It's heaviily subsidised from our shareholders to satisfy the government's requirements to reduce its cost base, so it has put a lot of pressure on us from the price point," Mr Whittaker says.
Two years ago Fuji Xerox split its business internally to place more emphasis on finance and service solutions to complement the commodity products it sells, including digital copy machines.
Big growth in recent years has come from the service solutions side - providing mail and document scanning and management for clients such as security firm Chubb, Yellow Pages, insurance companies and banks.
This has grown from generating $2 million to $3 million in revenue to $30 million to $40 million 18 months ago.
Fuji Xerox employs about 500 staff in New Zealand and 150 permanent temps.
For the second year running, the company was the top performer in the Fuji Xerox global group, beating Australia and China in both top- line and bottom-line growth.
Mr Whittaker has been named top managing director of the year across the group.
Fuji Xerox is due to file statutory accounts with the Companies Office shortly.