Mixed Bag of Financial Results for Canon’s Fourth Quarter, Full Year

Canon Inc of Tokyo, Japan, today reported financial results for its fourth-quarter 2018 and its full 2018 fiscal year.

Net income for the fourth quarter, which ended on December 31, 2018, increased to ¥71.71 billion yen, versus ¥54.60 billion for fourth-quarter 2017. Operating profit rose 30 percent to ¥99.58 billion.

However, fourth-quarter net sales were down 5.5 percent year-over-year to ¥1.06 trillion.

Full-Year 2018

For the 12 months that ended on December 31, 2018, Canon reported that net income increased by 4.5 percent to ¥252.8 billion. Basic net income attributable to Canon per share for the year was ¥234.09, a year-over-year increase of ¥11.21.

Net sales however were down 3.1 percent to ¥3,951.9 billion.

Canon’s gross profit ratio dropped by 2.4 points to 46.4 percent, which it says was mainly due to the fact that it reclassified  certain costs that were under operating expenses under cost of sales following the adoption of new accounting standards.

Excluding this reclassification, Canon’s gross profit ratio increased by 0.6 points to 49.4 percent. Operating expenses decreased by 10.6 percent year-over-year to ¥1,492.6 billion, due to company-wide cost-cutting efforts.  As a result, operating profit increased by 6.6 percent to ¥343.0 billion.

2018 Sales

Canon states that during 2018, sales of office copier/MFPs increased compared with the previous year due to the expanded sale of color models, mainly outside of Japan.

Sales of both monochrome and color laser printers increased compared with the previous year, supported by  steady sales of newly launched models.

Sales of consumables remained at the same level as the previous year, however. These factors resulted in total sales for the Canon’s office-business unit of ¥1,807.3 billion, a year-over-year increase of 0.1 percent, while income before income taxes increased by 17.3 percent year-over-year to ¥229.2 billion, which was partly due to an impairment loss during the previous year.

Looking at inkjet printers, although sales of refillable ink-tank models increased in emerging markets,  sales were down compared with the previous year, due to decreasing demand in developed economies.

Total sales volume of interchangeable-lens digital cameras decreased compared with the previous year due to contraction of the market mainly for entry-level models. However, sales of mirrorless cameras increased.

For medical equipment, newly launched diagnostic ultrasound systems and magnetic resonance imaging (“MRI”) systems experienced “solid demand,” mainly outside of Japan, achieving  increased sales compared with the previous year.

For industrial equipment, sales of semiconductor  lithography equipment increased significantly compared with the previous year, thanks to favorable market conditions. However, manufacturing equipment for OLED panels decreased compared with the previous year, mainly due to a slowdown in investment in OLED panels.

Forecast

Canon projects full-year 2019 sales of ¥3.9 trillion, a year-over-year decline of 1.3 percent; operating profit of ¥325.0 billion, a year-over-year decline of 5.2 percent; and net income of ¥240.0 billion yen, a year-over-year decline of 5.0 percent.

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