Tough Quarter for Canon as Sales, Income, Profits Down; Reduces Forecast

Canon Inc. Headquarters - Tokyo, Japan

Canon Inc. Headquarters – Tokyo, Japan

Canon Inc. of Tokyo, Japan, today reported results for its third quarter of fiscal 2016, reporting net sales of ¥103.9 billion and operating profit of ¥36.4 billion, down 15.9 and 48.2 percent, respectively, versus the third quarter a year ago. Net income was ¥22.33 for the third quarter, down 50.4 percent versus the third quarter a year ago, and ¥96.90 for the first nine months of Canon’s fiscal year, a year-over-year decline of  ¥41.66.

Net sales for the nine months ended September 30, 2016 totaled ¥2,436.3 billion, a year-over-year decline of 11.7 percent.

Canon states that demand for office copier/MFPs remained “at around the same level as for the previous year,” while demand for laser printers decreased from the previous year “due to sluggish economic conditions in emerging countries.” During the third quarter, although office MFPs “enjoyed solid demand, mainly for color models, sales of laser printers declined due to sluggish economic conditions in emerging countries.”

Canon says that in the camera market, it’s been “facing decreasing demand, primarily for digital compact cameras, suffered from a shortage of components arising from the Kumamoto earthquake earlier in the year.”

The firm reports that demand for its consumer-inkjet printers also “continued to decline.” Sales of inkjet printers declined due to the shrinking market for consumer products, says the firm. In contrast, sales of Canon industrial equipment increased, particularly systems used in the production of OLED displays, boosted by increased capital investment by panel manufacturers.

Within Canon’s Industry and Others sector, demand for lithography equipment used in the production of flat panel displays (FPDs) and manufacturing equipment for organic LED (OLED) displays “enjoyed strong growth thanks to active capital investment by panel manufacturers.”

Canon notes that the average value of the Japanese yen during the third quarter was ¥102.33 against the U.S. dollar, a year-over-year appreciation of approximately ¥20, and ¥114.25 against the euro, a year-over-year appreciation of approximately ¥22, which it says had a negative impact on its net sales of ¥103.9 billion and on operating profit of ¥36.4 billion.

Office Business Unit

Within Canon’s Office Business Unit, sales of office MFFs “overall increased from the same period of the previous year thanks to strong sales of color machines.” This growth was supported by steady sales of the A3 (12” x 18”)-model imageRUNNER ADVANCE C5500 series, which Canon released this year, and the small-office/home-office color A3 (12” x 18”) imageRUNNER ADVANCE C3300 series, which Canon launched in the previous year, along with expanded sales of the imagePRESS C10000VP series, which targets the production-printing market.

Among high-speed continuous-feed printers, sales of the Océ-produced VarioPrint i300, a high-speed, sheet-fed color inkjet press, increased year-over-year.

As for laser printers, although sales for the quarter only declined slightly year-over-year, the impact of “sluggish economic conditions led to a significant decrease in sales of consumables that has continued from the second quarter of 2016.”

Canon says that these factors, coupled with the negative effect of unfavorable currency-exchange rates, resulted in total sales for the business unit of ¥411.2 billion, declining 19.5 percent year-over-year, while operating profit totaled ¥28.6 billion, a year-over-year decline of 57.5 percent.

Forecast

Canon revised its forecast downward versus its previous outlook, and is now projecting full-year net sales of ¥3,360.0 billion, a year-over-year decline of 11.6 percent; operating profit of ¥235.0 billion, a year-over-year decline of 33.8 percent; income before income taxes of ¥262.0 billion, a year-over-year decline of 24.6 percent; and net income attributable to Canon Inc. of ¥165.0 billion, a year-over-year decline of 25.1 percent.

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