Canon Reports Results for Second Quarter

Canon Inc. of Tokyo, Japan, today reported results for its second-quarter 2019. Citing the negative impact of the U.S.-China trade war, the firm said it doesn’t see any signs of  improvement in the business environment. It also cited an economic slowdown in China and Europe, and said that in the industrial-equipment market, the recovery of customer capital investment has been pushed out further due to “sluggish smartphone demand and continuing decline in memory prices.”

During its second quarter, sales generated by Canon Imaging System (cameras) and industrial equipment were below those of last year. Sales of laser printers were also down, reflecting actions taken by Canon’s OEM partner to adjust inventory, which was also the case in the previous quarter (editor’s note: OEM partner likely refers to HP Inc.).

As a result, Canon posted second-quarter net sales, operating profit and net income that were down 10 percent to 905.9 billion yen, down 56 percent to 43.1 billion yen, and down 55.6 percent to 34.5 billion yen, respectively, The much lowers net sales is said to reflects Canon’s high sales volume last year, which exceeded 1 trillion yen in the second quarter for the first time in 10 years.

Growth of Medical-Equipment Sales

On the bright side, Canon says it did grow sales of  medical equipment and network cameras.

Office-Imaging Business

Sales generated by Canon’s office-imaging business were down 7.5 percent year-over-year, while operating profit was down 29.4 percent.

Canon says that in addition to continuing strong sales of next-generation color office copier/MFPs, it grew unit sales of high-speed models that it expects to to yield even more print volume.

However, as noted previously, with laser printers, sales declined, reflecting the impact of actions taken by its OEM partner to adjust the level of consumable inventory in Europe, which was also the case in the first quarter.

During the second quarter, net sales for MFPs were down 6.7 percent, while net sales for laser printers were down 15.6 percent. For its complete fiscal year ending in December, Canon is projecting that year-over-year, MFP sales will be down 2.7 percent, while laser-printer sales will be down 7.4 percent.

Regarding consumables, in the second quarter, sales decreased due to efforts to
adjust inventory levels by our OEM partner (HP Inc.), which was also the case in the first quarter. Canon says this was largely due to a gradual increase in the use of non-genuine consumables in Europe.

In the second half of the year during which the impact of inventory adjustment is not a  factor, Canon says it will work to expand hardware sales and link this to growth in consumable sales. It also pledged to continue to combat non-authorized patent-infringing consumables, and to promote the advantages of genuine OEM consumables.

Forecast

Canon cut its annual sales and profit forecast. It now expects revenue to decline  5.2 percent year-over-year for its fiscal year ending this December, while previously it had forecast a 2.6-percent year-over-year decline. It also forecasts net profit to fall 36.7 percent year-over-year, compared with the previous forecast of a 20.9 percent year-over-year decline.

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