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[Rich]

Falling sales of conventional photo film and intense competition in
the market for digital cameras saw Japan's Konica Minolta slump into
the red at the interim stage, and to forecast a large full-year loss.

The group, formed through the 2003 merger of Konika and Minolta,
warned that conditions would grow even more difficult in the future.

The Japanese maker of camera and office equipment said on Friday that
it had made a net loss of 3.48 billion yen (29.57 million dollars) in
the first half to September, reversing a net profit of 8.20 billion
yen a year earlier.

Operating profit rose 21.2 percent to 39.41 billion yen thanks to a
robust performance at its optics operations, while sales fell 3.3
percent to 517.60 billion yen

Konica Minolta is struggling as it tries to adapt to the rapidly
changing shift to digital photography and away from traditional film.

"Market demand rapidly and dramatically decreased with the surge of
digitization, which was much faster than our forecast, and we expect
this trend will further accelerate in the future," the company said in
a statement.

Konica Minolta plans to slash its global workforce of 33,000 by 10
percent in response to falling demand for conventional photo film
while streamlining its production facilities and sales network.

It now expects to post a net loss of 47 billion yen for the full year
to March, reversing an earlier forecast of a net profit of 23 billion
yen.

The expected loss will largely reflect 90 billion yen in charges the
firm will allocate for restructuring as it sharply reduces its
exposure to conventional photo film.

"We will work out details of a fresh turnaround plan by the end of
this year and when completed, the size of the (imaging) business may
fall to below 100 billion yen (in annual sales)," said Konica Minolta
president Fumio Iwai.

Konica Minolta currently generates revenue of around 200 billion yen
annually from its photo-imaging business, which covers digital
cameras, conventional cameras, photo film and printer paper.

"We had earlier planned a 'soft-landing' (from our restructuring) of
the business but due to a rapid deterioration of the business climate,
we need to accelerate the reform process," said Iwai.

"But we have no intention of withdrawing completely from any of our
existing product lines, including digital cameras," the president
added.

© 2005 AFP

[Paul Coen]

Bill Tuthill wrote: