Canon Financial Results Q2 2019 – The Times They Are A Changing

As anticipated, Canon had to adjust the expected sales figures for Q2 2019. And the published Canon financial results confirm it.

Canon’s sales figures for Q2 2019 aren’t exactly exciting with huge losses compared to Q2 2018 (see image on top). In Canon’s own words:

We still do not see any signs of improvement in the business environment that surrounds us. In fact, since our last earnings announcement, the situation surrounding U.S.-China trade friction has become more and more chaotic and economic slowdown in China and Europe has worsened. Furthermore, in the industrial equipment market, the recovery of customer capital investment has been pushed out further due to sluggish smartphone demand and continuing decline in memory prices.

About the imaging systems:

As for Imaging System, although we saw unit sales of mirrorless cameras grow at a higher rate than the market, sales and profit for the entire business unit declined, due to the impact of DSLR market contraction, particularly for entry-class models. Although the level of profit was low compared with the same period last year, by promoting the optimization of production and sales organizations in line with market changes, profitability did pick up from its bottom in the previous quarter.

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The EOS M50 and the new EOS R line can not save the plummeting camera market.

More about Canon’s camera systems:

Looking at interchangeable-lens cameras, in addition to market contraction centered on entry-class DSLRs, in 2018 we launched three new products that led to a high level of sales in the second quarter of last year. As a result, unit sales for the second quarter this year were down 22% to 1.08 million.

Against this backdrop, we successively launched strategic full-frame models into the mirrorless camera market from the second half of last year. The introduction of a high-end model, further heightened our presence in the market and at the same time had a positive impact on overall sales of our mirrorless cameras.

On the other hand, in the full-frame category of the market where price competition is increasing, as a result of prioritizing profitability, unit sales were below our target. However, for interchangeable-lens cameras overall, our unit sales were in line with our plan. As a result, we retained our full-year projection for unit sales. In terms of revenue, we did lower our projection to reflect a change in product mix to our plan. However, in the second half of the year we will stimulate sales through the launch of new lenses.

Specifically, we will enhance our lineup launching 5 new lenses for mirrorless cameras. Through kit sales that leverage our broad range of mirrorless camera lenses and by bundling cameras with accessories like our lens adapter that makes it possible to use our existing rich lens lineup we will promote further expansion of mirrorless camera sales.
In addition, we will further strengthen our efforts to generate user interest in our mirrorless cameras. As a large percentage of high-end models purchases involve the customer actually handling the model and trying it out before buying, in major cities in Japan and other markets, we will create even more touch points for users, proactively expanding opportunities to actually experience our products.

Additionally, for professional photographers, we will foster trust in our products, offering, among others, enhanced support at international sports events.

Through these measures, we will further raise our presence in the market for high-end models, which will also have a rippling effect on more volume oriented cameras and subsequently link this to a further boost in sales.

As for compact cameras, sales were in line with our plan. As such, we maintain our full-year unit sales projection. Through the launch of new products, we will raise the proportion of sales attributable to premium G series models and link this to improved profitability.

All published information for Canon’s Q2 2019 financial results are here.