HP has ended its 2020 financial year with a 3.6 per cent fall in revenue to US$56 billion after the COVID-19 pandemic caused a “substantial curtailment of [its] business activities”.
For the year ended 31 October 2020, the hardware giant saw a notable revenue uplift for notebooks, rising by 12 per cent year-on-year to US$25.7 billion.
However, other segments relating to corporate office environments were hit badly by the global shift to homeworking. In particular, workstation revenue fell by almost a quarter to US$1.8 billion, while desktop revenue fell by a softer nine per cent to US$9.8 billion.
HP’s printing business also took a big hit over the year, falling by 12 per cent to US$17.6 billion.
Geographically, revenue from the United States decreased by 1.8 per cent to US$20.2 billion and net revenue from outside of the United States decreased by 4.6 per cent to US$36.4 billion.
Meanwhile, its cost of sales also hit a steep US$53.2 billion. In its statement to shareholders, HP said it had experienced major supply chain disruptions during the pandemic when a number of factories in China and South East Asia were closed. It also cited “weakened economic conditions, significant economic uncertainty and volatility in the financial markets, both in the United States and abroad” as key factors.
“The COVID-19 pandemic is adversely impacting, and is expected to continue to adversely impact, our operations and financial performance,” the company said. "Related restrictions impacted the demand for certain products and services as a result of temporary closures of offices and businesses and as people moved to spending more time at home, which negatively impacted sales for commercial products in both personal systems and print.”
HP said while work-from-home remained the normal practice, its sales of in-office hardware would continue to decrease. The vendor also said channel partners have experienced disruptions in their operations due to restrictions implemented which has caused reduced and cancelled orders.
“This has further adversely impacted our results of operations and we expect it to continue to have a negative impact on our results of operations,” it added.
HP warned its business could be further affected should the financial success of channel partners were to weaken.
“Our results of operations may be adversely affected by any conflicts that might arise between our various distribution channels or the loss or deterioration of any alliance or distribution arrangement or reduced assortments of our products,” the vendor said. “Moreover, some of our distributors may have insufficient financial resources and may not be able to withstand changes in business conditions, including economic weakness, industry consolidation, and market trends.”
HP also expressed frustration with channel partners selling products to unauthorised resellers, claiming it prevents consistent pricing and negatively impacts gross margins.