On January 29, Canon Inc. released its financial report for the fourth quarter and fiscal year 2019, as well as projections for 2020.
For the full year, net sales of ¥3,593.3 billion ($32.95 billion) were down 9.1% from the previous year. Gross profits were down 12.3%, operating profit down 49.1% and net income down 50.5%. Results also came in below projections, due, said Canon, to sluggish markets, reflecting a greater-than-expected global economic slowdown.
Canon’s Office business unit saw sales and profit both decline, with a 5.8% drop in net sales and 23.5% drop in operating profit. More significant declines were in other business units. Specifically, Imaging System (which includes inkjet printers, large-format inkjet printers, commercial photo printers and image scanners, as well as cameras, lenses and calculators) was down 16.8% in net sales and 62% in operating profit. Despite expanding sales of refillable ink tank models, overall inkjet printer unit sales decreased compared with the previous year. Industry & Others (which includes broadcast and cinema-use video cameras for the first time, as well as lithography and OLED vacuum deposition equipment) was down 12.5% and 72.2% in net sales and operating profit, respectively. The new business of network cameras, said Canon, captured the high demand for security with a net sales increase. Only the Medial System unit stayed steady.
Looking more closely at the Office segment, demand for office MFDs was strong for new next-generation color models that feature enhanced security functions. Sales of monochrome models, however, declined due to the impact of economic slowdowns in emerging markets. In the production printing market, sales of a new compact model offering high-speed and high-volume printing steadily increased. As a result, overall unit sales of MFDs increased slightly compared with the previous year. As for laser printers, despite strong demand for new models that offer low energy consumption, compact body designs, and high productivity, overall unit sales decreased compared with the previous year due to decreasing sales of low-speed models, mainly in China where the economic slowdown continued. Sales of consumables decreased, mainly due to the economic slowdown in Europe. These factors resulted in total sales for the business unit of ¥1,702.6 billion ($15.1 billion), a year-on-year decrease of 5.8%, while income before income taxes decreased by 23.9% year on year to ¥174.3 billion.
For the fourth quarter ending Dec. 31, 2020, net sales were ¥953,469, down 9.9% year over year. The Office business unit’s net sales were ¥435,340 million, down 7.7% from the previous year.
With regard to the U.S. economy, as the strong employment environment, easing monetary policy, and bottoming out of manufacturing industry business sentiment due to waning concerns over U.S.-China trade friction are assumed, modest growth is expected to continue. For the European economy, while consumer spending is expected to remain firm and exports are expected to pick up, mainly due to problems with the U.K. leaving the EU, only a moderate recovery is expected. The Chinese economy is expected to bottom out, despite being affected by U.S.-China trade friction and thanks to measures taken by the government. As external demand recovers, the growth of emerging markets is expected to remain solid. With regard to the Japanese economy, thanks to the strong employment environment and government measures to reduce the impact of the consumption tax hike, modest growth is expected to continue. Looking at the global economy, while a modest recovery is expected, uncertainty is increasing due to growing geopolitical risks and concerns of a relapse in U.S.-China trade friction.
In the markets in which Canon operates, overall demand of office MFDs is expected to increase slightly thanks to solid demand for color models. Demand for laser printers, however, is expected to be below that of last year as only a modest economic recovery is expected. Demand for inkjet printers is expected to recover moderately, mainly in emerging markets.
Even in the increasingly uncertain business environment and upon taking into consideration the launch of competitive new products and a further strengthening of new businesses, such as medical equipment and network cameras, Canon projects full-year consolidated net sales in 2020 of ¥3,700 billion ($33.93 billion), a year-on-year increase of 3.0%; operating profit of ¥230 billion ($2.1 billion), a year-on-year increase of 31.7%; income before income taxes of ¥245.0 billion, a year-on-year increase of 25.2%; and net income attributable to Canon Inc. of ¥160.0 billion, a year-on-year increase of 27.9%.