Often, year-end results are the most interesting because they provide a picture of how the year went and what the outlook is for the coming year. With this report, however, Canon has confirmed three extremely important aspects of the camera market, giving it a boost in confidence going forward.
The financial year is six months away, and the release of second-quarter results is often just an indication for investors to see how business is “on track”. However, for this year’s Canon, the results are surprising for a number of reasons.
First, net sales for the quarter were 999 billion yen (about $7.5 billion), up from 882 billion yen last year (+13.3%), with gross profit at 464 billion yen (+11. 1%) but is operating profit (after all expenses) out of a total of 99 billion yen (+27.4%).
Printing remains the largest segment with 57%, followed by Images with 20%, however, Imaging has the highest operating margin with 16.1%: more than double the Medical division. The success in the first half of the year was attributed to increased demand for commodities, but there was a significant beneficial effect from the strengthening of the US dollar. The forecast for the full year was up slightly at 4.080 billion yen (+16.1%), but that delivered an operating profit of 376 billion yen, a significant increase of 33.4%.
So what does this look like for Images? Firstly, to reiterate that about 66% of income is from cameras, the rest is from network cameras. The operating situation in the first quarter was relatively flat (+5.8%), but this increased in the second quarter with sales reaching 127 billion yen (+13.2%). The picture is expected to end the year with net sales of 771 billion yen and operating profit of 98 billion yen, which reflects growing strength and optimism in the market. The camera segment sees a reported increase in its projected sales, currently at 500 billion yen.
ILC shipments totaled 680,000 (-7%), above 590,000 (-9%) last quarter. Interestingly, Canon was much more optimistic about ILC shipments at the end of last year taking into account a slight increase in the market to 5.68 million units, producing 3 million units alone.
However – mainly due to the COVID lockdown in Shanghai causing a shortage of components – it expects the ILC market to reach 5.45 million units, with its own market share of 2.8 million. Like PetaPixel reported, total camera shipments appear to have fallen below 8 million units for the first time, however those losses have come from built-in cameras and DSLRs. The mirrorless camera segment is really growing and, more importantly, increasing in value.
There are three takeaways from Canon’s second-quarter report. First, mirrorless camera sales are on the rise, both in volume and value. In its Q&A, Canon reaffirms its faith in a growing market based on dwindling DSLR shipments, rising mirrorless camera shipments, and closing compacts (currently estimated to ship only 500,000 units this year), coupled with the continued growth of the sales network.
This clearly highlights that – secondly – the DSLR is out as a category of product that it will sell as long as there is demand. How long this remains to be seen, but the relative demise of compact cameras suggests that it can be short-lived. Ultimately, its estimated decline in the ILC market reflects a reduction in the size of shipments due to a shortage of spare parts. This highlights the strength of the ability to sell in volume and value, affirming the dominant position in the market. As far as Canon is concerned, the only way to go up is to go up.
Image credits: Title photo licensed via Depositphotos.