Canon: Color Segments Drive Sales

Canon released its consolidated financial results for the third quarter of fiscal year 2013 (3Q2013) ended September 30. Net sales totaled ¥913.1 billion (US$9.3 billion), up 14.2% compared with the same period last year. Net income was ¥58.8 billion (US$0.6 billion). Operating profit grew 27.8% year-over-year (YoY) to ¥90.6 billion (US$924.6 million).

Toshizo Tanaka, Canon’s Chief Financial Officer, said, “We maintained or improved our market shares, enhancing our product competitiveness through the launch of new products. Through cumulative efforts to reduce costs and expenses, along with the yen’s depreciation, we posted our second consecutive quarter of growth in both net sales and profit”.

In this quarter, Canon posted solid growth in the Office Business Unit, including office multifunction devices (MFDs), laser printers, laser MFPs, digital production printing systems, continuous-feed printers, wide-format printers and document solutions, with sales totaling ¥493.9 billion (US$5,039 million), a 20.6% YoY increase. The company attributes the growth to the increased demand for color MFD models, led by the imageRUNNER ADVANCE C5200/C2200 series. Sales of monochrome and color copiers increased 16.8% and 15.8% respectively.

According to Seeking Alpha’s transcript on Canon’s earnings call, “Regionally, while market condition was firm in Japan and the United States, Europe remained challenging. In the emerging market, Canon saw worse-than-expected slowdowns in market growth amid ongoing price competition and the economic slowdown”.

Laser printers recorded strong growth in sales volume and MFPs are the driving force in this segment. Consumables posted positive unit sales growth as well. Net sales of printers grew 20.8%. Color printer units were up 31% YoY and monochrome printer units grew 22% YoY.

Canon’s inkjet printer business is within the Imaging System Business Unit. This market continued to shrink in the third quarter, so a decline in unit sales is reported. But Canon said it has improved its market share position in basically all regions. As for consumables, the company posted positive growth on a local currency basis, thanks to the steady expansion of the installed base.

Looking ahead, Canon expects the copier market to continue its growth, but it has lowered the sales projection for low-speed monochrome models. It projects the unit sales of laser printers will grow, especially among color models and MFPs. Mr. Tanaka said, “Within this market, we’ll work to expand the trend of positive sales growth, achieving double-digit unit sales growth for the full year. We’ll also work to expand sales of new models that will be launched in the autumn of this year, including MFPs with enhanced features to address mobility and MFPs specifically designed for emerging markets. As for consumables, as hardware growth will lead to somewhat greater growth in country sales, we expect the unit sales of consumables to be basically flat this year.

As for inkjet printers, Canon expects the market to shrink at close to a double-digit rate due to the worsening economic condition in Asia. It will work to expand sales in the coming quarter by making mobile printing easier to customers, via an enhanced link with cloud services and launching new products to the market. Canon foresees solid growth in ink consumables in 4Q2013.

Source of Canon’s earrings call transcript: www.seekingalpha.com
Source of Canon’s financial report: www.canon.com