Canon Financial Results for the Q2 and First Half of 2020

July 28, 2020 – Canon issued its consolidated results for the second quarter and first half ended June 30, 2020.

Net sales of ¥673,315 million were down 25.7% from the prior year period. For the first half, net sales were down 17.8%.

In its earnings statement Canon noted the impact of the economic impact of the COVID-19 pandemic, reporting the following:

Amid these conditions, in the markets in which Canon operates, as for office multifunction devices (MFDs) and laser printers, demand for both monochrome and color models declined. As for cameras, the trend of market contraction accelerated due to the impact of COVID-19. As for inkjet printers, although reduced demand in some emerging markets were seen, demand in developed countries and China increased due to remote working and learning.

As for the second quarter, sales of MFDs for the office and production printing market both decreased. As for laser printers, unit sales of both monochrome and color models were below those of last year in the same period, mainly reflecting the economic slowdown due to COVID-19. Sales of services and consumables also declined, as customers’ print volumes decreased mainly due to the impact of continuous office closures. Although top market share of the interchangeable-lens digital camera market was firmly maintained, unit sales were below those of last year in the same period, reflecting market contraction and sluggish demand due to COVID-19. As for inkjet printers, unit sales were above those of last year in the same period due to a rise in demand linked to remote working and learning in developed countries and China.

Results by Segment

Looking at Canon’s second-quarter performance by business unit, in the Office Business Unit, although new products of the imageRUNNER ADVANCE DX series were launched, unit sales of MFDs for the office and the production printing market were below those of last year in the same period due to delays in business negotiations and equipment installations as the spread of COVID-19 caused office closures. As for laser printers, unit sales for both monochrome and color models were below those of last year in the same period due to the ongoing economic slowdown. Sales of services and consumables also declined, as customers’ print volumes decreased mainly due to the impact of office closures for an extended period. These factors resulted in total sales for the business unit of ¥307.5 billion, a year-on-year decrease of 30.2%, while income before income taxes decreased by 98.2% year-on-year to ¥0.8 billion. Sales for the combined first six months of the year totaled ¥705.2 billion, a year-on-year decrease of 19.8%, while income before income taxes totaled ¥48.1 billion, a year-on-year decrease of 45.3%.

As for the Imaging System Business Unit, unit sales of interchangeable-lens digital cameras were below those of last year in the same period. This also reflected the impact of COVID-19 on sales activities despite the deterioration of mainly developed countries stopping towards the second half of the quarter. As for inkjet printers, unit sales in emerging market were below those of last year in the same period due to the impact of COVID-19. In developed countries and China, however, sales grew due to expanding demand resulting from remote working and learning. As a result, overall unit sales were above those of last year in the same period. These factors resulted in total sales for the business unit of ¥141.7 billion, a year-on-year decrease of 30.8%, while income before income taxes decreased by 93.8% year-on-year to ¥0.8 billion. Sales for the combined first six months of the year totaled ¥293.4 billion, a year-on-year decrease of 23.0%, while income before income taxes totaled ¥1.8 billion, a year-on-year decrease of 90.5%.

Outlook

Looking at the world economy for the third quarter onwards, the economic stagnation is expected to continue caused by the continuous spread of COVID-19. Although various economic measures and monetary policies are being implemented in each country and region, the prospect remains uncertain. Though it will take time to control the spread of infections and see a full-scale recovery in global economic activity, deceleration in the level of economic contraction heading towards the second half of the year is assumed which will then lead into a gradual recovery.

In the markets in which Canon operates, for office MFDs and laser printers, although a gradual recovery is assumed, demand is expected to remain below that of the previous year due to the impact of economic slowdown. As for interchangeable-lens digital cameras, although the overall market is expected to continue to shrink, in order to enhance the lineup in full-frame mirrorless camera during the third quarter, such two new models as the EOS R5/R6 launched, sales expansive activity is expected to be focused. As for inkjet printers, demand is expected to remain solid due to remote working and learning. As for the medical equipment market, only a gradual recovery in demand is expected due to the prolonged impact of COVID-19. For semiconductor lithography equipment, while demand towards memory devices is expected to remain firm, demand for image sensors and automotive devices is expected to remain in a phase of stagnancy. For FPD lithography equipment, while demand in small- and medium-size panels is expected to remain restrained, demand towards large-size panel is expected to remain solid. As for network cameras, the market is expected to restart expanding due to increasing demand for high-resolution cameras and the video content analytic solutions that make use of them.

With regard to currency exchange rates for the third quarter onwards, on which Canon’s performance outlook is based, Canon anticipates exchange rates of ¥105 to the U.S. dollar and ¥118 to the euro, representing appreciation of approximately ¥2 against the U.S. dollar and appreciation of approximately ¥3 against the euro as the annual average rates of the previous year.

Taking into consideration exchange rate assumptions, Canon’s first half performance as well as current market conditions, Canon’s 2020 full-year projection on a consolidated basis are net sales of ¥3,080.0 billion, a year-on-year decrease of 14.3%; operating profit of ¥45.0 billion, a year-on-year decrease of 74.2%; income before income taxes of ¥70.0 billion, a year-on-year decrease of 64.2%; and net income attributable to Canon Inc. of ¥43.0 billion, a year-on-year decrease of 65.6%.

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