Canon: Cost Cut and Yen Depreciation Boost Profit

“Looking back at the global economy in 2013, although the U.S. and Japanese economies began heading toward moderate recoveries during the latter half of the year, the economic downturn in Europe continued to drag on while the economies of emerging countries such as China faced slowdowns. As such, contrary to expectations at the beginning of the year, the global economy remained stagnant. As for exchange rates, the correction of the historic high value of the yen continued, with a trend toward a weaker yen growing increasingly clear.”—Canon

Canon has reported its 4th quarter and full year financial result of the 2013 fiscal year (ended Dec 31, 2013).

The printer vendor has reported ¥1.03 trillion revenue, ¥93.5 billion operating profit and ¥64.3 billion net income in the 4th quarter, recording 8.8%, 20.4% and 5.0% increase compared with the same period in 2012.

In 2013 fiscal year, revenue rose 7.2% to ¥3.73 trillion (US$35.5 billion), while operating profit grew 4.1% to ¥337.3 billion (US$3.2 million) and net income gained 2.6% to ¥230.5 billion (US$ 2.2 billion).

According to Canon, the rising profits were mainly due to the effects of ongoing cost-cutting efforts along with the depreciation of the yen. Every yen the Japanese currency weakens in 2014 against the dollar would add 6.4 billion yen to its operating profit, so said the company.

The revenue of Canon’s Office segment totaled ¥2 trillion, with 13.8% year-over-year increase. The products of this segment include copying machines, digital production printers, large format inkjet printers, laser printers and multi-function devices.

For the copier market, Canon achieved an 8% increase in color unit sales. However, total unit sales were down 2%, reflecting the sluggish sales of low-speed monochrome models in the first half of the year. Unit sales saw some improvement in the second half of the year, resulting in the 4% increase in total unit sales in the 4th quarter.

As for laser printer market, sales were sluggish at the start of the year. Driven by the double-digit growth of color MFPs and the new demand in emerging markets, the market has seen a few percentage points increase in 2013. Toshizo Tanaka, Chief Financial Officer and Executive Vice President of Canon, said, “During the year, we worked to broadly expand sales from the low end to the high end. As a result, we were able to raise our market shares, thanks to a 14% increase in unit sales. Unit sales of consumables for the year, however, were slightly below that of the previous year’s, reflecting sluggish hardware sales over the past several years and resulting in flat in the installed base.”

According to Canon, the global inkjet market has shrunk 5% due to continued economic weakness. Canon’s inkjet printers, which fall in the Imaging Systems Business Unit, have seen increased unit sales during the year. Thanks to the steady hardware sales and subsequent growth in installed base, consumables sales have also seen good progress.

In 2014, Canon expects the overall copier market to remain on a path of gradual growth, driven by continued expansion of colors. It will enhance its abilities to compete for large deals as well as expand sales in emerging market by strengthening product lineup.

Laser printer marker, on the other hand, is expected to grow at a gradual rate. According to Tanaka, “Last year, we focused on actively expanding sales and raising our market shares. And we have seen some positive result. This year, in turn, we will concentrate our focus on expanding sales of MFPs released since autumn of 2012. These efforts are expected to effectively expand future sales of toner cartridges. As for hardware unit sales, we aim to steadily realize growth in line with the overall market. And for unit sales of consumables, we expect this to be basically in line with those of last year’s.”

In 2014, Canon expects the inkjet market to remain basically flat. “We’ll work to expand sales by offering product that suits the unique market characteristics in each region. Especially in emerging markets of Asia, we’ll leverage our #1 position in order to achieve our goal of 2% unit sales growth. And for consumables, with further expansion of our installed base, we anticipate steady growth”, so said Tanaka.

Canon projects its full-year consolidated net sales to reach ¥3,850.0 billion (U.S.$36,667 million) in 2014 of, a year-on-year increase of 3.2%; operating profit of ¥360.0 billion (U.S.$3,429 million), a year-on-year increase of 6.7%; and net income attributable to Canon Inc. of ¥240.0 billion (U.S.$2,286 million), a year-on-year increase of 4.1%.