Canon Inc posted a 17.9 percent drop in quarterly operating profit

[Canon-F1]

TOKYO – Japan’s Canon Inc posted a 17.9 percent drop in quarterly operating profit on Wednesday, hurt by a strong yen and weaker demand for compact cameras as consumers switched to smartphones.

Canon says sales in China down more than 30 percent in 2012
 
TOKYO – Canon Inc said on Wednesday that its sales in China fell more than 30 percent in the year to December 2012, more than it had expected, due to a slowdown in that country and a territorial dispute between Tokyo and Beijing.

http://www.canon.com/ir/conf2012/conf2012e.pdf

[Ellen Schmidtee]

Set high prices for lenses, lose sales to competitors, profits go down, what a surprise.

NOT.

Yes, I've heard new lenses' price went down, but price drops (and sometimes the lenses themselves) haven't reached Israel yet. Sigma lenses did.

[AmbientLight]

According to the linked document there is no relation of reduced profits to lens or dslr sales, which have gone up. What is going down is the compact camera market, which is as expected as people switch to smartphones. Canon has also sold less printers, but again this has nothing to do with lenses or dslrs.

[neuroanatomist]

Set high prices for lenses, lose sales to competitors, profits go down, what a surprise.

NOT.

Well, thanks for that uninformed opinion.  Did you actually read the linked presentation materials?  Perhaps if you had, you'd have noticed that while Canon lost revenue and profits fell in some business segments, and sales of PowerShot cameras were down, their sales in the dSLR and lens category was actually up 14% in FY12.  Are you surprised now? 

[Dylan777]

I'm looking for a mirrorless body. Canon eos-m is NOT on my purchase list. I'm getting Fuji X100s as my next compact travel camera.

Look forward for Fuji FF compact body, similar to Sony RX1, with price tag around $1900 of course.

[PJL]

I'll be the first to admit that I know nothing about how Canon operates as business.  Do the DSLR and lens segments operate separately from the compact segment?  I guess what I'm getting at is do compact camera sales help subsidize the R&D for lenses? If that's the case and sales of compact cameras continue to decline due to the increasing viability of smartphone cameras that may start to show up in prices of their higher end products.  Who knows.

Maybe Canon is diverse enough to be sheltered from that.  And I'm probably missing something obvious.  Just a thought I had when reading this.

[AmbientLight]

What is really interesting in the document is the value percentage of what they call digital cameras with interchangeable lenses (and related products) compared to compact cameras, because Canon seems to be quite adept at replacing income by compact camera sales with income by dslrs, EOS-M and related lenses, which are much more profitable compared to those compacts. A increase of 14% for the year in an area, which makes up 76-77% of the value total is pretty good.

So I believe we do not need to worry about operating income going down overall. If there are any cuts or price increases due to lower volumes they will likely befall a less profitable sector.

[zim]

I think the 'Return to Shareholders' graph is the important one 

[Ellen Schmidtee]

Set high prices for lenses, lose sales to competitors, profits go down, what a surprise.

NOT.

Well, thanks for that uninformed opinion.  Did you actually read the linked presentation materials?  Perhaps if you had, you'd have noticed that while Canon lost revenue and profits fell in some business segments, and sales of PowerShot cameras were down, their sales in the dSLR and lens category was actually up 14% in FY12.  Are you surprised now? 

You mean that if Canon sold even more DSLR lenses, it's bottom line wouldn't have improved? That's even more surprising.

[unfocused]

I thought the most interesting thing was the little chart showing the interchangeable lens camera division represents 31% of the units sold and 76% of the camera division's "value" base.

Let's keep that in perspective though, before people start jumping to conclusions. That includes the entire Rebel line, as well as the EOS-M, so it's impossible to tell from that figure anything about the impact of 5DIII, 6D or lens sales.

[michi]

I think all the camera makers are about to miss the boat.  Kind of like Kodak did with the digital evolution.  Compact cameras will sell less and less as digital phones get better.  Canon's Powershot N may have been a move in the right direction.  But I think the cameras need to be even smaller and "cooler" to appeal to the new generation of users.  They need to be cellphone sized with fancy touch screens and operating system, a nice zoom, easy wifi transfer and so on.

On the other hand, I'm afraid that the camera makers won't keep up, and thus prices for our DSLR's, lenses, flashes etc will only go up as they try to keep their profits coming in.  Which in turn of course will hurt them too.  I find the latest $2,000+ lenses overpriced and unfortunately can't afford them.

[Malte_P]

I think all the camera makers are about to miss the boat.  Kind of like Kodak did with the digital evolution.  Compact cameras will sell less and less as digital phones get better.  Canon's Powershot N may have been a move in the right direction.  But I think the cameras need to be even smaller and "cooler" to appeal to the new generation of users.  They need to be cellphone sized with fancy touch screens and operating system, a nice zoom, easy wifi transfer and so on.

you could say they have to build cellphones into their cameras.
i don´t see how they can stop the success of mobile phone cameras.

i bought my mother a small P&S and she never used it.
but she takes a ton of pictures with her mobile phone.
 

[brianboru]

The long-form results at:
http://www.canon.com/ir/results/2012/rslt2012e.pdf

Has this to say:

Within the Imaging System Business Unit, unit sales of interchangeable-lens digital cameras increased thanks to the competitively priced EOS Rebel series along with the EOS 5D Mark III and EOS 60D advanced-amateur models.
As for compact digital cameras, despite the significant deterioration of market conditions, sales volume remained at the same level as the previous year thanks to robust sales of the PowerShot ELPH 110 HS and PowerShot A2300.
With respect to inkjet printers, sales volume surpassed that for the year-ago period owing to the early restoration of production following the flooding in Thailand. Furthermore, the company successfully entered new markets with the launch of its CINEMA EOS SYSTEM lineup of professional cinematography products, targeting Hollywood and the broader motion picture and television production market, along with the new DreamLabo 5000, targeting the commercial photo printing market. As a result, sales for the segment increased by 7.2% year on year to ¥1,406.0 billion (U.S.$16,161 million) while operating profit decreased by 0.5% to ¥ 210.3 billion (U.S.$2,417 million).

I think it's interesting that the 60D gets a shout-out for contributing to a unit sales increase given the lack of love for the XXD line in some of the other threads here.

Outlook statement is:

Demand for interchangeable-lens digital cameras is expected to continue increasing across all regions. While the compact digital camera market is projected to shrink due to economic conditions and the spread of smartphones, the impact on advanced-functionality, high-value-added products will likely be relatively small.

The final page of the report does break out R&D for the Imaging group:  2012 - 83,948 vs 2011 - 82,731 million Yen.  Company wide R&D is supposed to go up 5% in 2013, unfortunately  there isn't a breakdown of where it's going.

[Mt Spokane Photography]

Compact cameras will sell less and less as digital phones get better.

Where have you been?  Canon has mentioned this in their annual financial reports for at least the last two years, and so has Nikon.  They are well aware of the trend to use camera phones rather than point and shoot cameras.  That does not mean that P&S cameras don't sell, 80 million were produced in 2012.
checkout 2012 industry wide sales here:  http://www.cipa.jp/english/data/pdf/d_2012_e.pdf
BTW Sony has tried to make headway in the cellphone market and lost their shirt, (huge amounts of actual losses)
This actually puts Canon in a good position, because of their very strong DSLR sales and low cost lens production (most people just buy a kit lens).

[unfocused]

Thanks, Mt Spokane, for linking to that chart. It's a real eye-opener. I would have never expected that more SLRs would be shipped to Europe and Asia than the Americas. Two million more units to Europe is really impressive.

I'm not surprised that Asia gets a huge percentage of the non-SLR interchangeable lenses, as I have read they are very popular in China and elsewhere in Asia, but the numbers are pretty impressive: almost twice as many as the Americas.

I've been one that thinks the P&S market is dying. Not ready to change that opinion, but it is noteworthy that P&S still accounts for about 80% of all cameras sold.