July 26, 2018 — Canon Inc. reported its consolidated financial results for the second quarter and first half of 2018. Net sales for the quarter were ¥1,006.4 billion, up 1.4 percent over the previous-year period. For the first half, net sales of ¥1,967.1 billion, up .1 percent year over year.

The gross profit ratio dropped by 2.7 points to 47.2 percent and gross profit decreased by 4.1 percent year on year to ¥474.6 billion due to mainly the fact that certain costs that were under operating expenses have been reclassified under cost of sales by adopting new accounting standards related to revenue recognitions. Operating expenses decreased by 6.1 percent year on year to ¥376.6 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, second-quarter operating profit increased by 4.4 percent to ¥98.0 billion. Basic net income attributable to Canon Inc. shareholders per share was ¥71.93 for the second quarter, a year-on-year increase of ¥8.40, and ¥124.83 for the first half, a year-on-year increase of ¥10.85.

The average values of the yen during the second quarter and the first half of the year were ¥109.14 and ¥108.61 against the U.S. dollar, respectively, year-on-year appreciation of approximately ¥2 and ¥4, and ¥129.97 and ¥131.45 against the euro, respectively, year-on-year depreciation of approximately ¥8 and ¥10.

Demand for office multifunction devices (MFDs) remained at around the same level as the previous year, while demand for laser printers continued to recover, mainly in emerging countries. The market for inkjet printers achieved moderate growth. During the second quarter, unit sales of office MFDs increased compared with the same period of the previous year due to the expanded sales of color models. Additionally, unit sales of laser printers increased compared with the same period of the previous year, supported by the steady sales of newly launched models, as demand recovered in emerging countries.

Looking at Canon’s second-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 such models as the newly launched next-generation A3 (12x18) color imageRUNNER ADVANCE C3500 series and the imageRUNNER C3020 series, strategic models for emerging countries. In commercial printing, sales of the newly launched Océ-produced Colorado 1640 wide-format roll-to-roll printer were solid. As for laser printers, sales increased compared with the same period of the previous year, supported by steady sales of new models that achieved low power consumption, compact body designs and high productivity, and steady sales of consumables. These factors resulted in total sales for the business unit of ¥477.7 billion, a year-on-year increase of 1.5 percent, while operating profit totaled ¥61.9 billion, a year-on-year increase of 10.7 percent. Sales for the combined first six months of the year totaled ¥935.4 billion, a year-on-year increase of 0.8 percent, while operating profit totaled ¥114.9 billion, a year-on-year increase of 3.2 percent.

Outlook

For office MFDs, color models are expected to enjoy solid demand. Looking at the laser printer market, demand for printers is expected to continue to improve in emerging countries. With regard to inkjet printers, demand is expected to exceed that of the previous year as demand recovers in emerging countries.

Upon taking into consideration makers’ postponement of capital investment for OLED panel manufacturing equipment and the sales of office MFDs and interchangeable-lens digital cameras shifting to a slightly lower price range, Canon projects full-year consolidated net sales of ¥4,120.0 billion, a year-on-year increase of 1.0 percent; operating profit of ¥378.5 billion, a year-on-year increase of 17.7 percent; income before income taxes of ¥410.0 billion, a year-on-year increase of 15.9 percent; and net income attributable to Canon Inc. of ¥280.0 billion, a year-on-year increase of 15.7 percent.

See Canon's full Q2 report here.