Canon Inc. Reports First-Quarter Results

Canon Inc. of Tokyo, Japan, today reported results for its first quarter that ended on March 31, 2018, with net sales down 1.2 percent to ¥960.7 billion, but net income up 3.7 percent to ¥57 billion, both first first-quarter 2017.

General Overview

According to Canon, during the first quarter, sales of office copier/MFPs increased compared with the same period of the previous year, with color-model office copier/MFPs “achieving higher growth than the market average.” Total sales volume of laser printers increased compared with the same period of the previous year, supported by expanded sales of high-end models.

Total sales volume for interchangeable-lens digital cameras and digital compact cameras declined compared with the same period of the previous year, due, according to Canon “to the shrinking market and the fact that sales volume for the same period of the previous year was particularly high after the resolution of shortages resulting from the Kumamoto earthquake in 2016.”

Looking at inkjet printers, although refillable ink-tank inkjet sales grew steadily, mainly in emerging countries, sales declined compared with the same period of the previous year.

Sales of medical equipment declined, mainly due to the fact that sales for the same period of the previous year were particularly high with the resolution of restrained purchasing by customers after Canon’s completion of acquisition of Canon Medical Systems Corporation (“CMSC”).

On the other hand, sales of semiconductor lithography equipment “increased significantly, thanks to favorable market conditions, and sales of network cameras increased steadily in response to the growing market.”

“Brisk demand for memory chips is driving our clients to boost investment,” Canon Chief Financial Officer Toshizo Tanaka said in a statement. “That led to a 2.5-fold jump in sales of our semiconductor lithography equipment.”

Under these conditions, first-quarter net sales declined by 1.2 percent year-over-year to ¥960.7 billion. Due to mainly the fact that certain costs that were under operating expenses have been reclassified under cost of sales by adopting new accounting standards related to revenue recognitions, the gross profit ratio dropped by 1.8 points to 46.3 percent and gross profit decreased by 4.9 percent year-over-year to ¥444.7 billion.

Operating expenses decreased by 6.8 percent year-over-year to ¥367.6 billion, thanks, says Canon, to its continuing company-wide cost-cutting efforts and efforts to reduce spending, as well as the impact of the aforementioned reclassification of figures as part of the adoption of new accounting standards.

As a result, first-quarter operating profit increased by 5.3 percent to ¥77.1  billion. Other income (deductions) increased by ¥3.9 billion, mainly due to foreign-currency exchange gains, while income before income taxes increased 9.9 percent year-over-year to ¥85.8 billion and net income attributable to Canon Inc. increased by 3.7 percent to ¥57.1 billion.

Basic net income attributable to Canon Inc. shareholders per share for the quarter was ¥52.89, a year-over-year increase of ¥2.45.

Office Business Unit

Net sales were flat at  ¥457.7 billion for Canon’s Office Business unit, the same level as the previous year, while operating profit totaled ¥53.0 billion, a year-over-year decline of 4.3 percent, both versus first-quarter 2017.

However, Canon says office copier/MFP sales rose versus the same period of the previous year, supported by expanded sales of next-generation color models designed to strengthen the product lineup, such as the A3 (12”x18”) imageRUNNER ADVANCE C5500 series.

Among digital sheet-fed presses, the Océ-produced VarioPrint i300, a high-speed, sheet-fed color inkjet press, “has been steadily receiving orders.”

As for laser printers, although sales increased steadily compared with the same period of the previous year, “supported by steady sales of new models that achieve low power consumption, compact body designs and high productivity,” laser-printer consumables’ sales declined compared with the same period of the previous year, “due to particularly high level of sales for the same period of the previous year.”

Forecast

Canon maintains its previous projection of full-year consolidated net sales of ¥4,300.0 billion, a year-over-year increase of 5.4 percent; operating profit of ¥404.0 billion, a year-over-year increase of 25.6 percent; income before income taxes of ¥420.0 billion, a year-over-year increase of 18.7 percent; and net income attributable to Canon Inc. of ¥280.0 billion, a year-over-year increase of 15.7 percent.

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