Canon Says Q1 Profit Hit by Weak Printer, Camera Sales

[jpfilmz]

Quote

 

Q1 operating profit falls 39 pct, more than expected

Office equipment, compact digital camera sales slump

Firm trying to diversify away from consumer cameras (Adds segment breakdown, context)

TOKYO, April 26 Japan’s Canon Inc on Tuesday reported a steeper-than-expected fall in first-quarter operating profit on weaker demand for office equipment in emerging markets and slower global sales of compact digital cameras.

The world’s biggest maker of printers and cameras also cut its outlook for the full year ending December.

For January-March, operating profit dropped 39 percent to 40.1 billion yen ($361.4 million), the company said. That missed the 67.74 billion yen average of five analyst estimates, according to Thomson Reuters data.

Canon said it now expects full-year operating profit of 300 billion yen, lower than a previous forecast of 360 billion yen.

Quarterly operating profit from office equipment, its biggest segment, fell 38 percent from a year earlier while profit from imaging systems such as cameras fell 33 percent.

To reduce its reliance on cameras, Canon agreed to buy Toshiba Corp’s medical equipment unit for 665.5 billion yen last month. The deal followed the purchase last May of 85 percent of Swedish video surveillance firm Axis AB.

The company, which earns about 80 percent of revenue overseas, said the yen’s appreciation in the first quarter had a negative impact on earnings.

For the rest of the year, it said it expects the U.S. dollar to trade at an average of 110 yen compared with a previous assumption of 120 yen.

Read more: http://www.canonrumors.com/canon-says-q1-profit-hit-by-weak-printer-camera-sales/#ixzz46w2A73OK

 

 

Pretty significant drops.  Seems like Andrew has been dead right about Canon all this time. 

[mkabi]

Yeah, don't worry about Canon. I know, I'm not... 

I was going to say a lot of shit about them. But not worth it.

[Jimmy]

People really need to stop looking at quarterlies and making sweeping statements. You are trying to analyse a drop in profits without ANY of the variable overheads and cost info to hand. It is next to useless.... None of us know what outlay they made in that quarter in a certain segment, knowing that Q2 or Q3 will then show a significant gain because of that investment.

You only have to look further down that article ... They purchased several companies, last year... Maybe some of those purchases skewed Q1's profits as they transitioned them into the main company?

[ntblowz]

quote from the report

 

"sales volume of interchangeable-lens digital cameras remained at around the same level as the previous year owing to healthy demand for the advanced-amateur-model EOS 80D, launched this year, and the EOS M3 and M10, which were released the previous year, in Japan and other Asian markets. As for digital compact cameras, while sales volume declined amid the ongoing contraction of the market, PowerShot G-series cameras, the lineup of which grew to five models in the previous year, enjoyed solid demand"

[eleison]

2 hours ago, ntblowz said:

quote from the report

 

"sales volume of interchangeable-lens digital cameras remained at around the same level as the previous year owing to healthy demand for the advanced-amateur-model EOS 80D, launched this year, and the EOS M3 and M10, which were released the previous year, in Japan and other Asian markets. As for digital compact cameras, while sales volume declined amid the ongoing contraction of the market, PowerShot G-series cameras, the lineup of which grew to five models in the previous year, enjoyed solid demand"

 

Last year was not a good year for Canon.  In any case, I do like the spin they put on it though.  If they sold more interchangeable-lens camera, they would have said it.  Instead, they said "around the same level"... In other words, I bet you they sold less.. Canon stock is trading around 5 year lows.  Canon is too big of a company to have sales of cameras "like the previous year".  Canon is slowly imploding and they are not even willing to admit it.  Canon is becoming more and more out of touch with reality.

[Phil A]

1 minute ago, eleison said:

 

Last year was not a good year for Canon.  In any case, I do like the spin they put on it though.  If they sold more interchangeable-lens camera, they would have said it.  Instead, they said "around the same level"... In other words, I bet you they sold less.. Canon stock is trading around 5 year lows.  Canon is too big of a company to have sales of cameras "like the previous year".  Canon is slowly imploding and they are not even willing to admit it.  Canon is becoming more and more out of touch with reality.

This was business figures. Do you expect them to go all "abandon ship, shareholders sell quick!" or what? Sometimes I wonder what people expect from these things. It's like Sony claiming how they're THE growing camera brand, yet I have never seen an A7 model in real life, it was always a NEX with kit lens. It's just regular business behaviour, the company I work for's PR announcments also sound massively different than the internal communication.

[Nikkor]

The funny thing is that if the mid-range camera offerings were the problem, we all know they could change that in no time (not holding off the last few things you could add).

The problem I see in stills is that the 5D mkiii is perfectly fine for 35mm. Yes, you can increase DR and lowlight, but it doesn't really change anything. 35mm is almost maxed out. So if they add what we are asking for, it's sort of game over.

This is obviously an exageration, but I think there is some truth in it.

[eleison]

22 minutes ago, Phil A said:

This was business figures. Do you expect them to go all "abandon ship, shareholders sell quick!" or what? Sometimes I wonder what people expect from these things. It's like Sony claiming how they're THE growing camera brand, yet I have never seen an A7 model in real life, it was always a NEX with kit lens. It's just regular business behaviour, the company I work for's PR announcments also sound massively different than the internal communication.

 

I think a good company would be more straight forward.  Look at Tesla.  When they communicate with the press, they have the bad and the good.  For example, they say that they delivered X number of cars, LOWER than what they promised.  But they will deliver more cars in the future because they have learned from their mistakes and will improve the way they will build cars. Canon would be smart to do the same thing.  For example, canon can say they really didn't make that much money last quarter.  HOWEVER, they have done research and found that people want X type of cameras/products.  They will now build X type of cameras and products to please the public and to increase revenue.  This will NOT happen for a while because canon is out of touch with reality.  Being out of touch, does not instilling confidence among their shareholders.  Expect the stock to trend down even more.

13 minutes ago, Nikkor said:

The funny thing is that if the mid-range camera offerings were the problem, we all know they could change that in no time (not holding off the last few things you could add).

The problem I see in stills is that the 5D mkiii is perfectly fine for 35mm. Yes, you can increase DR and lowlight, but it doesn't really change anything. 35mm is almost maxed out. So if they add what we are asking for, it's sort of game over.

This is obviously an exageration, but I think there is some truth in it.

 

If You Don't Cannibalize Yourself, Someone Else Will - Steve Jobs

 

Canon needs to innovate, or they will continue to die.  market segmentation no longer works...

[The Chris]

Its always funny to read comments on financial reports from people that fall into one of the following categories:

1. Commenting on the analysis from a website that doesn't understand financial reports
2. Commenting on comments based on the above
3. People too lazy to actually read the reports, and just comment on presser summaries or stories like the Reuters report in the OP
4. People that did read the actual financial report and still don't know what the hell they're talking about

Imaging is only about 1/3rd of Canon's overall business model and as it acquires other businesses (such as the Toshiba Medical Division it recently bought) that ratio continues to shrink. As Jimmy mentioned, quarterly reports are just a snapshot of a small period of time, and unless you take the time to read where the cash is going and expenses not related to selling devices (like acquisitions, investments, retiring debt, and so on), along with understanding the impact of the declining Yen - you're talking out of your ass. Canon (like most Japanese companies) is getting hit hard by the way the government is handling the value of the Yen, not long ago the exchange rate of 125y = $1 was considered a crisis situation, Canon is using 113y = $1 in this report.

Because some seem to ignore the obvious - Canon reported a profit of over $360 million in its slowest quarter of the year. Imaging sales are down by just over 10% in terms of revenue.

[Jimmy]

"Continue to die" ... talk about over statement!

You do realise that the report also says they made a PROFIT of $360m .... Profit, not sales, not income... Profit.

Why do people throw out all logic just because a brand hasn't made the indie camera they want? Yes, they need to diversify, as both the camera and printer businesses are taking a hit due to mobile and internet tech, but they are still a massive company with fingers in all kinds of pies. They are still head and shoulders the pro choice of still shooters and have a heavy involvement in pro AV too. They are beginning to get into the niche imaging markets and no doubt have involvement in stuff like 3D printing and mobile sensor tech.

They might be making less profit in one quarter (you know, 3 months), but dying... haha.... I think people actually want it to be true too, just because they haven't sunk as low in price as Sony and Lumix. Imagine that... wanting a huge brand to die out, just because they don't make the camera that ticks your very specific set of boxes. God love the internet.

[eleison]

20 minutes ago, Jimmy said:

"Continue to die" ... talk about over statement!

You do realise that the report also says they made a PROFIT of $360m .... Profit, not sales, not income... Profit.

 

 

Sooooo.. Lets say my salary is $85,000 a year.  That's my salary working for ABC corporation.  However, this year I make only $52,000...  Yes, I still "made an income"... but that's 39% decrease in income.  If someone took away 39% of your income, would you worry about your job??  Would you worry about the state of the business you are in????

In any case, I don't really care (that much :).  I'm just here to gloat.  I use to be a canon shooter.  They made me wait for 3 years, stringing me along.. hinting they would make a product that I would like to buy/afford.  Too late canon.  I've moved on.  We need a dead pool.  How many years or quarters can canon survive???  Canon is dying..  Slowly, but surely especially as a camera company for the masses.  After all, they are "diversify away from consumer cameras"..

[The Chris]

38 minutes ago, eleison said:

 

I think a good company would be more straight forward.  Look at Tesla.  When they communicate with the press, they have the bad and the good.  For example, they say that they delivered X number of cars, LOWER than what they promised.  But they will deliver more cars in the future because they have learned from their mistakes and will improve the way they will build cars. Canon would be smart to do the same thing.  For example, canon can say they really didn't make that much money last quarter.  HOWEVER, they have done research and found that people want X type of cameras/products.  They will now build X type of cameras and products to please the public and to increase revenue.  This will NOT happen for a while because canon is out of touch with reality.  Being out of touch, does not instilling confidence among their shareholders.  Expect the stock to trend down even more.

 

If You Don't Cannibalize Yourself, Someone Else Will - Steve Jobs

 

Canon needs to innovate, or they will continue to die.  market segmentation no longer works...

Tesla is a misguided comparison, and their reports read just like any other, all roses and rainbows despite the fact they can't actually sell cars at a profit. Cars are a money pit, and they likely will never be able to make a profit selling them. To produce them in significant enough numbers to make a profit means a large increase in production costs. Their losses would be much worse if Toyota hadn't essentially gifted them a shuttered factory.

Canon has been profitable for over a decade and will still be profitable going forward - they also own about 40% of the digital camera market. Tesla has never made a profit and sells fewer cars in a year than Toyota sells in just two days, they're a tiny niche brand using cars to showcase their battery tech - so they can sell batteries and associated systems to others. They're never going to make a profit selling cars because of economies of scale, development costs are high, when you sell in small volume you don't move enough units to recoup costs. The money is in the batteries - that's why Musk built the Gigafactory.

Tesla makes no profit, its selling all its cars at a loss, its burning its cash reserves, and its stock sells for $250 a share. Canon makes a measly $360m in one quarter (more profits than Tesla will make based on forecasts for another couple years) and its trading around $30. I know which stock I would buy (hint - its the one with the better price/earnings ratio).

Tesla looks like a dot-com bubble/burst company that will sell off most its intellectual property (cars) to a Chinese conglomerate and just make batteries in a few years.

7 minutes ago, eleison said:

 

Sooooo.. Lets say my salary is $85,000 a year.  That's my salary working for ABC corporation.  However, this year I make only $52,000...  Yes, I still "made an income"... but that's 39% decrease in income.  If someone took away 39% of your income, would you worry about your job??  Would you worry about the state of the business you are in????

In any case, I don't really care (that much :).  I'm just here to gloat.  I use to be a canon shooter.  They made me wait for 3 years, stringing me along.. hinting they would make a product that I would like to buy/afford.  Too late canon.  I've moved on.  We need a dead pool.  How many years or quarters can canon survive???  Canon is dying..  Slowly, but surely especially as a camera company for the masses.  After all, they are "diversify away from consumer cameras"..

Annual income didn't decrease by 39%, your financial ignorance is detrimental to whatever point you're trying to make. Canon is still the most profitable camera company on the planet, not sure what you're gloating about really other than the inability to read a financial report.

[eleison]

Just now, The Chris said:

Tesla is a misguided comparison, and their reports read just like any other, all roses and rainbows despite the fact they can't actually sell cars at a profit. Cars are a money pit, and they likely will never be able to make a profit selling them. To produce them in significant enough numbers to make a profit means a large increase in production costs. Their losses would be much worse if Toyota hadn't essentially gifted them a shuttered factory.

Canon has been profitable for over a decade and will still be profitable going forward - they also own about 40% of the digital camera market. Tesla has never made a profit and sells fewer cars in a year than Toyota sells in just two days, they're a tiny niche brand using cars to showcase their battery tech - so they can sell batteries and associated systems to others. They're never going to make a profit selling cars because of economies of scale, development costs are high, when you sell in small volume you don't move enough units to recoup costs. The money is in the batteries - that's why Musk built the Gigafactory.

Tesla makes no profit, its selling all its cars at a loss, its burning its cash reserves, and its stock sells for $250 a share. Canon makes a measly $360m in one quarter (more profits than Tesla will make based on forecasts for another couple years) and its trading around $30. I know which stock I would buy (hint - its the one with the better price/earnings ratio).

Tesla looks like a dot-com bubble/burst company that will sell off most its intellectual property (cars) to a Chinese conglomerate and just make batteries in a few years.

 

But yet, share holders are willing to give Tesla a high market cap.  Say what you want, investors as a whole believe in the company.  In one of Tesla's latest press release, telsa blames themselves and their "hubris" for not meeting their production numbers.  When has Canon done something similar and followed through?  Canon is spinning in it's press releases.  That's not a good sign.  After a while, it might actually believe it's own spin. It might already have.

 

 

[Zach Ashcraft]

30 minutes ago, eleison said:

 

Sooooo.. Lets say my salary is $85,000 a year.  That's my salary working for ABC corporation.  However, this year I make only $52,000...  Yes, I still "made an income"... but that's 39% decrease in income.  If someone took away 39% of your income, would you worry about your job??  Would you worry about the state of the business you are in????

 

Or lets say you make 85K last year. This year you make 85K but spend 39% of that on things that ensure the future success of your business and position. Paints a different picture doesn't it? 

 

[Jimmy]

I can't even go into the futile use of your income analogy, you may as well use an analogy about pink snakes and bicycles, it is so ridiculously off.

I would go look up phrases like "you have to spend money to make money" and "speculate to accumulate".... They are a bit more apt here.

You did however underline my theory that people are actually willing Canon to fail, simply because they didn't make a certain camera that suits their specific needs.

We all get a bit annoyed a feature hold back, pricing etc... But I am first and foremost a professional that uses tools to make money, so can respect products like the 1D-X II and C300 mk II and disregard the things that are not targetted at me, like the 800D.

[Andrew Reid]

4 hours ago, Jimmy said:

People really need to stop looking at quarterlies and making sweeping statements. You are trying to analyse a drop in profits without ANY of the variable overheads and cost info to hand. It is next to useless.... None of us know what outlay they made in that quarter in a certain segment, knowing that Q2 or Q3 will then show a significant gain because of that investment.

You only have to look further down that article ... They purchased several companies, last year... Maybe some of those purchases skewed Q1's profits as they transitioned them into the main company?

You are in the running for the biggest Canon apologist on the internet at this rate.

32 minutes ago, The Chris said:

Tesla is a misguided comparison, and their reports read just like any other, all roses and rainbows despite the fact they can't actually sell cars at a profit. Cars are a money pit, and they likely will never be able to make a profit selling them.

Hmm, electric cars. No profit in those he says!! Bit of a sweeping statement and very wrong indeed. You haven't noticed the future direction of the market, a bit like how Canon didn't notice the future direction of the consumer camera market for about 10 years and now here's the payback.

My prediction - in the future Apple and Telsa will make as much profit from selling electric vehicles as Ford.

And it isn't just the disruptive newcomers, the whole car industry is in on the act, gearing up for their own mass market electric vehicles.

[Jimmy]

Just now, Andrew Reid said:

You are in the running for the biggest Canon apologist on the internet at this rate.

Why, because i'm not an idiot?

I don't own a Canon product (you have just bought one though, right?)... I don't give a shiny shite who produces the image making machine I use... I just cannot deal with the level of idiocy shown on here at times.... I'd post exactly the same if someone were trying to make a big deal out of the Sony quarterlies, Samsung etc....

Misinformation is not helpful to this industry, your blog or your forum.

[The Chris]

3 hours ago, Andrew Reid said:

You are in the running for the biggest Canon apologist on the internet at this rate.

Hmm, electric cars. No profit in those he says!! Bit of a sweeping statement and very wrong indeed. You haven't noticed the future direction of the market, a bit like how Canon didn't notice the future direction of the consumer camera market for about 10 years and now here's the payback.

My prediction - in the future Apple and Telsa will make as much profit from selling electric vehicles as Ford.

And it isn't just the disruptive newcomers, the whole car industry is in on the act, gearing up for their own mass market electric vehicles.

Electric cars wouldn't even exist if manufacturers weren't forced to by the uptick in government mandated fuel mileage standards. EV's can't even reach 1% of total auto sales, the future isn't inefficient/costly/heavy batteries it's equally large/expensive charging stations, sales figures clearly reflect that. Sales in the U.S. would be far less without a massive tax credit, here they're being propped up by government subsidies.

But please show me what EV manufacturer makes a profit selling them? Everyone but Tesla sells them in the U.S. to satisfy CARB mandates, and nobody is selling them at a profit, Nissan and GM have both admitted they're losing money on EV's, and the rest are half assed conversions of petrol cars to get the credit for mileage standards. Tesla is bleeding cash, they burned through about $1.5 billion last year and lose over $4000 on every car sold. 

I've seen even the future for Tesla, its bankruptcy when the cash reserves runs dry. Cars will quickly become what the Mac is for Apple if the Gigafactory ever reaches capacity, a segment with a small/loyal customer base, but not critical to survival. 

You read it here first. 

And Canon is still the first company to produce a 4k DSLR, seems like everyone else is playing catch up. 

[jpfilmz]

4 hours ago, Jimmy said:

"Continue to die" ... talk about over statement!

You do realise that the report also says they made a PROFIT of $360m .... Profit, not sales, not income... Profit.

Why do people throw out all logic just because a brand hasn't made the indie camera they want? Yes, they need to diversify, as both the camera and printer businesses are taking a hit due to mobile and internet tech, but they are still a massive company with fingers in all kinds of pies. They are still head and shoulders the pro choice of still shooters and have a heavy involvement in pro AV too. They are beginning to get into the niche imaging markets and no doubt have involvement in stuff like 3D printing and mobile sensor tech.

They might be making less profit in one quarter (you know, 3 months), but dying... haha.... I think people actually want it to be true too, just because they haven't sunk as low in price as Sony and Lumix. Imagine that... wanting a huge brand to die out, just because they don't make the camera that ticks your very specific set of boxes. God love the internet.

"For January-March, operating profit dropped 39 percent to 40.1 billion yen ($361.4 million), the company said. That missed the 67.74 billion yen average of five analyst estimates, according to Thomson Reuters data. Canon said it now expects full-year operating profit of 300 billion yen, lower than a previous forecast of 360 billion yen."

They made $360 million when they expected to make $605 million.  I'm not saying Canon is dying but looking at the imaging systems...a 33% profit drop is not in a favorable direction to be moving.  We'll see that happens next.

[Jimmy]

Seeing what happens next is pretty much my point and why quarterly reports can look scarier than they are. Things might get worse, I'm in no way saying they won't... But equally some deals made in Q3 and Q4 and other purchases, ideas and releases might start paying off. (Q2 will have many sales for Olympics, Euro 2016 etc, for instance).

There are people here that seem to believe Canon are stupid, slow etc and actually will die out, just because they don't offer 4k for $1k .... I'm just offering a counter view ... I think they are mixing things up like they never have before... 50mpx sensor.... 250mpx sensor... 4k/60p... Ultra low light camera, 8k prototypes etc etc

They are just not focusing on a very small group that is vocal here.

I want a perfect 360 camera... Canon don't offer it... I don't get mad at Canon. This thought process seems simple to me. Not sure that makes me a Canon apologist... I extend the same thought process to all the other companies not making my perfect 360 camera too.