HP shares rose 6 percent

HP Inc. has disclosed in its full-year financials that its revenue is projected to remain flat between the fourth quarter of 2019 and the fourth quarter of 2020.

Following favorable revenue figures, the company has revised its EPS outlook from $ 1.83– $ 1.87 to $ 2.00 per share, and has issued a dividend increase of 10 percent. Investors responded positively to the announcement, and soon after the results were published HP shares rose more than 6 percent from $ 21.76 to $ 23.17.

The firm’s revenue growth remained flat during Q4 2020, as it generated $ 56.6 billion in revenue, 3.6 percent lower than the $ 58.8 billion reported in Q4 2019. HP’s slight overall decline in revenue during Q4 2020 can be accounted for by its printing segment, which has declined. 3 percent higher than the same period of 2019.

In an earnings call with analysts and investors, Enrique Lores, HP’s president and CEO, was excited about the company’s prospects of returning to annual revenue growth in FY 2021. “We had record unit shipments in the quarter, reflecting the important role of HP technology. playing in the lives of our customers,” Lores said.

“Our results give us a lot of confidence in our ability to drive long-term growth and shareholder value in 2021 and beyond,” he said.

HP’s Q3 2020 financial results

Broadly, HP’s revenue is reported under two main divisions: personal systems and printing. Personal systems include revenue earned from the company’s notebook, desktop, and workstation divisions. Sales in printing include revenue from its supplies, consumer hardware and commercial hardware segments.

Personal Systems generated the majority of HP’s revenue at $ 10.4 billion during Q4 2020, but its growth was flat compared to Q4 2019, in which it reported similar figures. The firm’s notebooks performed best in the segment, reporting $7.4 billion in revenue, an 18 percent increase over the $6.2 billion raised in Q4 2019.

HP’s printing division showed a 3 percent drop from $ 4.9 billion in Q4 2020 to $ 4.8 billion in Q4 2020. Similarly to the firm’s personal systems business, its printing revenue has been relatively flat, but it represents a significant sequential recovery at 20. Percent revenue decline experienced during Q3 2020.

HP’s 3D Printing Activities During the Fourth Quarter

Although HP does not specifically report on its 3D printing financials, Lores devoted some time to an earnings call to discuss its disruptive technologies. Lores revealed that the firm’s graphics and AM businesses are still trading at below-par levels, but also said both segments made quarterly recoveries.

Lores also expressed enthusiasm about the potential of HP’s new Molded Fiber Advanced Tooling Solution, which allows users to automate the tooling manufacturing process. The machine is designed to be deployed in end-use scenarios, and according to Lores, it represents a shift in the company’s philosophy toward “high-value applications”.

HP’s 3D printing revenue was boosted by the sale of the HP Multi Jet Fusion (MJF) 5210 to the 3DPRINTUK Service Bureau as well as various other industry partnerships during Q4. Working with Diandrite, the firm developed advanced software for its Universal Build Manager, while a partnership with Evonik produced a new printable thermoplastic elastomer.

Later in the earnings call, Lores said HP’s 3D printing revenue would depend on the macroeconomic situation, yet the firm sees the technology as a “long-term opportunity”.

“We are excited for the disruptive potential in this field, as our innovative technology opens up completely new possibilities,” Lores said. “We’re doing all this, changing the way we work to unlock value and become a leaner, more digitally capable company.”

HP’s outlook for the 2021 fiscal year

After reaching its three-year cost reduction target of 40 percent, Lopes insisted in an earnings call that the company was now moving well into 2021. As part of its restructuring program, HP has closed 30 sites and increased its virtual service interaction. Up to 300 percent in the second half of the year.

While the firm still intends to reduce discretionary spending where possible, it has managed to repurchase investors in 2020 and return a total of $ 4.1 billion in dividends. Given that HP ended the financial year with $ 1.8 billion in free cash flow, it now aims to continue to buy back at least $ 1 billion in shares per quarter, even during 2021.

Closing the session, Lores expressed confidence that the company’s market-leading position would translate into revenue growth during FY 2021. “We have a diverse and flexible business model, and are taking the necessary steps for the future,” concluded Lores. “We are committed to generating strong cash flows and value capital allocation.”

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