April 26, 2022 — Canon released its consolidated results for the three months ending March 31, 2021.
Net sales were up 4.4% from the previous year period; operating profit was up 7.9% and net income up 3.4%. Canon increased its full-year projections based on the results.
2022 First Quarter in Review
Looking back at the first quarter of 2022, the global economy continued to recover, despite the resurgence of the COVID-19 Omicron variant, due to increased booster vaccination rates and easing of restrictions of economic activities in various countries. However, the global shortage of semiconductor chips and the disruption in logistics due to high demand continued, and the economic outlook became increasingly uncertain due to the worsening Ukraine crisis and acceleration of inflation. In the United States, economic recovery continued due to an increase in personal consumption and a solid employment situation through economic measures. In Europe, consumption began to drop due to a decrease in exports caused by economic and financial sanctions and rising prices caused by worsening conditions relating to the Ukraine crisis. However, economic activity in the United Kingdom and other countries began to return to their pre-COVID levels. In China, personal consumption declined due to restrictions under its Zero-COVID strategy, although domestic demand recovered as government-related infrastructure investment increased. In other emerging countries, the economy gradually recovered as a result of eased restrictions. In Japan, economic recovery remained moderate due to ongoing quasi-emergency measures.
In the markets in which Canon operates, despite the impact of the shortage of semiconductor chips as well as production delays due to the resurgence of COVID-19 infections and supply chain disruptions, demand remained firm. Demand for office multifunction devices (MFDs) and laser printers continued to recover. For inkjet printers, demand in home use remained solid. For cameras, demand remained solid, mainly in mirrorless cameras. For medical equipment, resumption of routine examinations at medical institutions continued, although demand in Japan declined this year due to last year’s Japanese government spending. For lithography equipment, demand for semiconductor lithography equipment continued amid favorable market conditions in a wide range of products such as memory and logic. For FPD (Flat Panel Display) lithography equipment, capital investments from panel manufacturers remained solid.
The average value of the yen in the first quarter was ¥116.33 against the U.S. dollar, a year-on-year depreciation of approximately ¥10, and ¥130.40 against the euro, a year-on-year depreciation of approximately ¥3.
As for the first quarter, despite the shortage of semiconductor chips and the disruption in logistics due to high demand, Canon prioritized product supply by maximizing production, which was achieved by switching to different parts and developing business with new component suppliers. Net sales for the first quarter increased by 4.4% year-on-year to ¥879.4 billion due to rising prices of products and depreciation of the yen. Gross profit as a percentage of net sales decreased by 0.7 points to 44.9% due to the rising costs of parts and logistics. However, first-quarter gross profit increased by 2.6% year-on-year to ¥394.4 billion due to the depreciation of the yen. Operating expenses increased by 1.4% year-on-year to ¥318.3 billion as a result of an increase in operating expenses denominated in foreign currencies due to the depreciation of the yen and non-recurring expenses incurred to close a certain production facility, despite the continued efficiency-focused controls of expenses and a gain on the sale of a branch of an overseas sales subsidiary that determined it to be unnecessary after conducting a functional review. As a result, operating profit increased by 7.9% year-on-year to ¥76.1 billion. Other income (deductions) decreased by ¥3.9 billion year-on-year to a loss of ¥8.4 billion, mainly due to valuation losses on securities and currency exchange losses from liabilities denominated in foreign currencies. As a result, income before income taxes increased by 2.5% year-on-year to ¥67.7 billion and net income attributable to Canon Inc. increased by 3.4% year-on-year to ¥46.0 billion.
Basic net income attributable to Canon Inc. shareholders per share was ¥43.97 for the first quarter, a year-on-year increase of ¥1.46.
Results by Segment
Looking at Canon’s first-quarter performance by business unit, in the Printing Business Unit, demand for office MFDs recovered. However, unit sales decreased compared with the previous year due to the shortage of semiconductor chips. As for laser printers, unit sales increased compared with the previous year due to solid demand. Sales of services and consumables increased compared with the previous year thanks to increases in customer print volumes as a result of recovering in office occupancy rates. For inkjet printers, unit sales of both Cartridge Printers and Refillable Ink Tank Printers were above those of the same period of the previous year due to solid global demand. For equipment in the production printing market, unit sales increased compared with the previous year mainly in the United States and Europe due to strong sales of the varioPRINT iX series of high-speed sheet-fed color inkjet presses. These factors resulted in total sales for the business unit of ¥504.8 billion, a year-on-year increase of 7.5%, while income before income taxes increased by 0.7% year-on-year to ¥55.1 billion due to a recovery of services and consumables, despite rising costs of parts and logistics. Sales and income increased in the Printing Business Units as a whole, and income before income taxes as a percentage of net sales remained high at 10.9%.
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