Disappointing Printer Sales Blamed for Weaker Profits

Canon has unveiled its earnings report for the first quarter of 2016. The OEM’s first-quarter net sales decreased 7.0% year on year to ¥797.2 billion (US$7.38 billion). Despite the appreciation of the yen, the gross profit ratio decreased only 0.3 points year on year to 50.8% owing to ongoing cost-cutting activities and efforts aimed at controlling price reductions. Operating expenses decreased 2.1% year on year to ¥364.7 billion (US$3.37 billion) thanks to Group-wide efforts to thoroughly reduce spending. As a result, first-quarter operating profit decreased by 39.4% to ¥40.1 billion (US$370 million).

Demand for office multifunction devices (MFDs) remained at the same levels as for the previous year, while the market for laser printers shrunk due to the sluggish market in emerging countries. During the first quarter, although office MFDs enjoyed solid demand, mainly for color models, total sales volume of laser printers declined due to the contraction of the market. Inkjet printer sales volume remained stable due to such factors as expanded sales of new products in developed countries.

In terms of segment performance, total sales for the office business unit registered ¥454.4 billion (US$4.2 billion), decreasing 14.1% year over year, while operating profit totaled ¥44.7 billion, a year-on-year decrease of 37.7%. Unit sales for office MFDs overall increased from the same period of the previous year, including monochrome models, due to strong sales of color models, led by small-office/home-office color A3 (12”x18”) imageRUNNER ADVANCE C3300-series models launched in the previous year, and the imagePRESS C10000VP-series.In the laser printer segment, unit sales volume declined year over year due to the shift in sales strategy away from selling low-end models to high-added-value models.

Canon expects the laser printer market to return to positive growth in the second half of 2016. Due to a projected modest recovery, unit sales for the full year are expected to decline 1% this year and grow 1% next year. Growth driving force is expected to come from MFPs, color models in developed countries, as well as monochrome models in emerging markets. Canon expects market growth to be basically flat over the mid-term.

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