Canon Inc. Q3 FY2017- Financial Results - Business as Usual

Canon Q3 FY2017 Headlines

  • Overall company Net Sales up y-on-y +27.7%
  • Overall company Operating Profit up y-on-y +101.1%
  • Imaging System segment Net Sales up y-on-y +9.0%
  • Imaging System segment Operating Profit up y-on-y +31.1%
  • Sales of Digital Cameras firm, especially the new models

Canon Inc. has posted a third consecutive quarter of Y-on-Y sales growth, that is pretty impressive in the current technological climate. Overall Sales are 27% up and better still profits rise by over 100%.

Consolidated net sales have improved +27.7% to ¥994.5B and operating profit has improved y-on-y to ¥80.5B a +101.1% improvement. Operating profit to Net Sales ratio has also improved to 8.1% another good indicator.

How have these improvements come about?

These figures are helped by the integration of the new Medical sector and good results from the Industry and Others sector that produces FPD lithography and OLED vacuum deposition equipment.

Improvements in foreign exchange rates are responsible for over a quarter of the rise in Net Sales and nearly half of the rise in Operating Profit. Whilst this is good news for ¥en profits and looks like being stable for the rest of the year, this is out of the companies hands.


So the ongoing structural reforms are making good progress in a challenging market. What about the imaging sector?

Imaging Segment Results


The imaging segment that includes Digital Cameras, Lenses and Ink Jet Printers has been under pressure due to falling markets, strong competition, and supply issues. The 3rd quarter produced a positive +9.0% rise in Net Sales and a +31.1% rise in Operating Profit. This took Net Sales to ¥271B and Operating Profit to ¥39B.

Digital Cameras are up +11.2% and Inkjet Printers up by +6.6% by value. Overall, Digital Cameras are up +2% by units and Inkjet Printers up by 1% by units.

Digital Camera Net Sales as a proportion of Whole Business


Looking at how much Digital Cameras and Lenses add to the overall business results we can see that in Q3 they were worth 17% of sales. As Canon diversify, this percentage is slowly dropping with little expectation that it will rise significantly given the still shrinking camera market.

As the market for Digital Cameras matures and growth is hard to come by, diversification to other more profitable areas where growth is strong will continue in the coming months and years. Using core strengths, such as Lens production, will aid in the development of some new business areas, i.e. Network Cameras.

Digital Camera Unit Sales by Type


Taking a closer look at the Digital Cameras sold we can see that Interchangeable Lens (IL) models have declined in numbers by -4.4% from 1.37M units to 1.31M units y-on-y. These include both ‘true’ DSLR and Mirrorless models. Compact Cameras, however, have increased by +13.3% from 750K to 850K units y-on-y for this quarter.

The increase in Compact Camera sales is largely put down to the recovery of supply following a very poor previous year due to the Kumamoto earthquake. This is also the reason for the fall in IL cameras because the previous year more than the usual IL cameras were sold due to not being affected by the earthquake.

The ratio of type by units sold is 61% in favor of IL cameras. Whereas, by value including lenses, this was 86%.

Canon Market Share of the Digital Camera Market


The chart above is taken from Canons own figures of market size and predictions for the rest of 2017. These figures correlate reasonably well with CIPA figures. Canon's market share of IL cameras in 2016 was ‘just’ 49.3% of the total market by units. In 2017, that is predicted to slip a little over 1% to 48.2%.

Not so with the Compact cameras. Here Canon only had 26.7% of the total market in 2016. This is predicted to rise as more advanced cameras take over this segment. Canon G-series cameras are gaining ground from the competition, especially with the G7x MkII and G9x MkII selling strongly. Full-year predictions are for the market share of compact cameras to rise to 29.6%.


Canons business diversification and re-structuring is working well and the overall business is healthy. Exports are more lucrative with a weaker Japanese Currency.

After a disrupted year in 2016 and continued market shrinkage, Canons Digital Camera business continues be resilient with fixed lens Compact Cameras making a big improvement whilst IL Cameras have fallen back a little.

New models are the lifeblood of the camera industry. Those brands that can regularly bring new models to market will prosper whilst those that don't will be left behind. Canon is the first to report so we will have to watch carefully to see what the competition has done.

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