On April 25, Canon reported its first quarter results for the three months ending March 31, 2018.

Canon Q1 earnings

During the first quarter, unit sales of office MFDs increased compared with the same period of the previous year, with color-model office MFDs achieving higher growth than the market average. Total sales volume of laser printers increased compared with the same period of the previous year, supported by the expanded sales of high-end models. Total sales volume of interchangeable-lens digital cameras and digital compact cameras decreased compared with the same period of the previous year, due to the shrinking market and the fact that sales volume for the same period of the previous year was particularly high after the resolution of shortages resulting from the Kumamoto earthquake in 2016.

Looking at inkjet printers, although refillable ink tank models grew steadily, mainly in emerging countries, unit sales decreased compared with the same period of the previous year.

Operating expenses decreased by 6.8% year on year to ¥367.6 billion, thanks to continuous Group-wide cost down efforts and efforts to reduce spending as well as the impact of the aforementioned reclassification of figures as part of the adoption of new accounting standards. As a result, first-quarter operating profit increased by 5.3% to ¥77.1 billion. Other income (deductions) increased by ¥3.9 billion, mainly due to foreign currency exchange gains, while income before income taxes increased by 9.9% year on year to ¥85.8 billion and net income attributable to Canon Inc. increased by 3.7% to ¥57.1 billion. Basic net income attributable to Canon Inc. shareholders per share for the quarter was ¥52.89, a year-on-year increase of ¥2.45.

Results by Segment

Looking at Canon’s first-quarter performance by business unit, starting with the Office Business Unit, unit sales of office MFDs increased from the same period of the previous year, supported by expanded sales of next-generation color models designed to strengthen the product lineup, such as the A3 (12”x18”) imageRUNNER ADVANCE C5500 series.

Among Digital sheet-fed presses, the Océ-produced VarioPrint i300, a high-speed sheet-fed color inkjet press that offers superior low-running-cost performance, has been steadily receiving orders. As for laser printers, although unit sales increased steadily compared with the same period of the previous year, supported by steady sales of new models that achieve low power consumption, compact body designs and high productivity, the sales of consumable decreased compared with the same period of the previous year due to particularly high level of sales for the same period of the previous year. These factors resulted in total sales of ¥457.7 billion for the business unit, the same level as the previous year, while operating profit totaled ¥53.0 billion, a year-on-year decrease of 4.3%.

Outlook

As for the outlook from the second quarter onward, the U.S. economy is expected to grow steadily due to improvements in corporate earnings and capital investment thanks to tax reform. The European economy is expected to recover slowly due to the uncertainty surrounding the U.K.’s decision to leave the EU, although exports are expected to increase. Looking at China, the economy is expected to continue growing through solid consumer spending and changes in fiscal policy, while emerging economies, such as those of Russia and Brazil, are expected to maintain steady growth due to the recovery of natural resource prices. With regard to the Japanese economy, the outlook indicates a trend of gradual recovery supported by recovery of consumer spending as employment conditions and personal income improved. Overall, the global economy is expected to grow moderately, despite such concerns as geopolitical risks and protectionism.

In the businesses in which Canon is involved, for office MFDs, color models are expected to enjoy solid demand despite the contraction of the market for monochrome models, leading to the same level of demand overall compared with the previous year. Looking at the laser printer market, demand for printers is expected to continue to improve in emerging countries, resulting in overall demand remaining at the same level as that of the previous year.

With regard to currency exchange rates for the second quarter onward, on which Canon’s performance outlook is based, Canon anticipates exchange rates of ¥107 to the U.S. dollar and ¥132 to the euro, representing appreciation of approximately ¥5 against the U.S. dollar and depreciation of approximately ¥6 against the euro as the annual average rates of the previous year. As changes in foreign exchange rates and the economic environment are estimated to have little impact on full year projection, Canon maintains its previous projection, in that full-year consolidated net sales in 2018 of ¥4,300.0 billion, a year-on-year increase of 5.4%; operating profit of ¥404.0 billion, a year-on-year increase of 25.6%; income before income taxes of ¥420.0 billion, a year-on-year increase of 18.7%; and net income attributable to Canon Inc. of ¥280.0 billion, a year-on-year increase of 15.7%.

Read the full results statement.