Canon Fiscal Year End 2017, It Was a Good Year

[Canon Rumors Guy]

Canon has released their 2017 year end results, and they were quite good for the company. Canon saw a nearly 20% gain in sales and operating income up about $3 billion USD or 44.8%.</p>
<p>Canon is a large company, and their acquisition of healthcare and security companies has had a very positive effect on their bottom line, as well as their tried and true office imaging division.</p>
<p>Things are also looking up for the camera imagine division, which saw growth in a declining market. Canon saw almost a 4% increase in sales and a very good 22% gain in operating profit for the division.</p>
<p><img class="aligncenter size-large wp-image-33290" src="http://www.canonrumors.com/wp-content/uploads/2018/01/canon2017yearend-728x462.jpg" alt="" width="728" height="462" srcset="http://www.canonrumors.com/wp-content/uploads/2018/01/canon2017yearend.jpg 728w, http://www.canonrumors.com/wp-content/uploads/2018/01/canon2017yearend-225x143.jpg 225w, http://www.canonrumors.com/wp-content/uploads/2018/01/canon2017yearend-610x387.jpg 610w" sizes="(max-width: 728px) 100vw, 728px" /></p>
<p>Canon achieved their sales growth with the launch of 6 new cameras, which was the most in the industry, and their growth in mirrorless remains in double digits.</p>
<p>Canon predicts a small growth of 1.2% in camera sales, which would suggest they’ll continue to announce more cameras than anyone else in the industry.</p>
<p>Canon also plans to continue developing their G series line of cameras, even as the compact camera market continues to shrink at a fast rate, Canon predicts a 16% decline in compact camera sales in 2018. Canon will continue to work on increasing their market share, as well as increasing profits in the segment.</p>
<p><img class="aligncenter size-large wp-image-33291" src="http://www.canonrumors.com/wp-content/uploads/2018/01/2017imaging-728x462.jpg" alt="" width="728" height="462" srcset="http://www.canonrumors.com/wp-content/uploads/2018/01/2017imaging.jpg 728w, http://www.canonrumors.com/wp-content/uploads/2018/01/2017imaging-225x143.jpg 225w, http://www.canonrumors.com/wp-content/uploads/2018/01/2017imaging-610x387.jpg 610w" sizes="(max-width: 728px) 100vw, 728px" /></p>
<p><strong>Canon had this to stay about the state of the Camera industry:</strong></p>
<p>In 2017, the market for interchangeable-lens cameras shrank by 1% to 11.4 million units. This rather small decrease reflects, among others, the market’s recovery from the supply shortage caused by an earthquake in 2016. We, on the other hand, posted a sales decline of 3% to 5.51 million units, which was in line with our plan. Although our sales decreased at a faster rate than the market, this was expected as our sales were at a high level in 2016 because the earthquake did not affect us.</p>

<p>Canon took steps to stimulate demand through new products, launching 6 models in 2017, the most in the industry. All of these new products were well received by the market, receiving high markets for their enhanced network connectivity and AF capabilities for which there is strong user demand. Among these, we grew sales of the 6D Mark II – a model that features a full-size sensor in a body that is relatively compact and light and offers improvements in basic functions, which contributed to the shift to hi-amateurs. Launching such new products, enables us to limit the decline in selling prices and as a result, we improved sales and profitability compared with last year.</p>
<p>As for 2018, given that the market in 2017 was at a high level due to the earthquake, we expect the market to shrink by 4% to 11 million units. Within this market, however, we expect our unit sales to be 5.5 million units, which is in line with last year.</p>
<p>The new products launched in 2017 that were just highlighted will contribute to sales for a full-year. With this and continued efforts to enhance our lineup we will stimulate demand and work to further increase our market share. Within this, for mirrorless cameras where we are working to enhance our lineup, this year we continue our aim to grow at a double-digit rate, putting focus on expanding sales of mainly new products that captures SNS user demand.</p>
<p>From a profit perspective, we will work to improve our product mix by raising the proportion of new product sales. Additionally, to reduce costs, we will promote automation and in-house production as well as accelerate sales of mirrorless cameras thereby benefiting from lower cost of sales through volume effect.</p>
<p>Next, compact cameras.</p>
<p>In 2017, the market shrank by 10% to 13.5 million units, while our sales were flat at 4.04 million. In 2018, we expect the market to shrink by 19% to 11 million units. Within this, we expect our sales to decline 16% to 3.4 million. Despite the markets continued decline, we will continue to take steps to improve our profitability and market share, expanding sales of mainly G series premium models.</p>
<p><strong>You can find all of the Canon financial results below:</strong></p>
<ul>
<li><a href="http://global.canon/en/ir/results/2017/rslt2017e.pdf" target="_blank" rel="nofollow noopener">Fiscal Results (PDF)</a></li>
<li><a href="http://global.canon/en/ir/conference/pdf/conf2017e.pdf" target="_blank" rel="nofollow noopener">Presentation (PDF)</a></li>
<li><a href="http://global.canon/en/ir/conference/pdf/conf2017e-sum.pdf" target="_blank" rel="nofollow noopener">Speech Summary (English Translation) (PDF)</a></li>
<li><a href="http://global.canon/en/ir/conference/pdf/conf2017e-d.pdf" target="_blank" rel="nofollow noopener">Supplementary Data (PDF)</a></li>
</ul>
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[ahsanford]

"In 2017, the market for interchangeable-lens cameras shrank by 1% to 11.4 million units. This rather small decrease reflects, among others, the market’s recovery from the supply shortage caused by an earthquake in 2016. We, on the other hand, posted a sales decline of 3% to 5.51 million units, which was in line with our plan. Although our sales decreased at a faster rate than the market, this was expected as our sales were at a high level in 2016 because the earthquake did not affect us."

I expect the 'all is well' and YAPODFC camps to slice the above passage very differently.

Seems reasonable to me, but you can't really say "well, they are just getting back the sales the earthquake took away" each year.

It remains a contracting market and here they are proliferating new product lines in-between product lines with very little feature differentiation. Seems a very expensive way to squeeze the slightly nicer body upcharge out of buyers, as it dilutes the total number of bodies each line is churning out and it carries a ton of weight for excess and obsolescence.

Overall, I think they are doing fine, but I'm not sure how sustainable fragmenting the crop market into so many little segments will turn out to be.

- A

 

[Mt Spokane Photography]

Canon is very conservative and predictable in dealing with competition. They have invested heavily in automated assembly over the past several years, and as it matures, they can produce cameras for a significantly lower cost than the competition.

Their plan is simple, more discounts and sales, particularly in the mirrorless area in order to run production lines at full capacity and to capture more market share. They are introducing more new models because buyers pay more for new models, even if they are almost identical to the older one. We have always seen that happen in compact cameras, now the policy will move up a tier.

 

[Talys]

"In 2017, the market for interchangeable-lens cameras shrank by 1% to 11.4 million units. This rather small decrease reflects, among others, the market’s recovery from the supply shortage caused by an earthquake in 2016. We, on the other hand, posted a sales decline of 3% to 5.51 million units, which was in line with our plan. Although our sales decreased at a faster rate than the market, this was expected as our sales were at a high level in 2016 because the earthquake did not affect us."

I expect the 'all is well' and YAPODFC camps to slice the above passage very differently.

Seems reasonable to me, but you can't really say "well, they are just getting back the sales the earthquake took away" each year.

It remains a contracting market and here they are proliferating new product lines in-between product lines with very little feature differentiation. Seems a very expensive way to squeeze the slightly nicer body upcharge out of buyers, as it dilutes the total number of bodies each line is churning out and it carries a ton of weight for excess and obsolescence.

Overall, I think they are doing fine, but I'm not sure how sustainable fragmenting the crop market into so many little segments will turn out to be.

- A

Even though it sounds obtuse, the statement actually does make sense.

In plainspeak: "When the earthquake hit in 2016, some of our competitors' supplies were constrained, while ours were not. Some people who would have bought competing products either bought our products instead or held off on their purchases. However, we never expected that shift to be permanent, and now they longer have a supply issue. We expected this, and our business plan made up for profits by stratifying our products to maximize our sales per customer."


When you look at the chart of CIPA ILC sales by canonnews.com, it actually bears out that way.

2015 - 5.57 Canon / 13.05 total
2016 - 5.67 Canon / 11.61 total
2017 - 5.51 Canon / 11.50 total

So - (1) Canon got a big bump from 2016 as a percentage of total sales due to other companies not being able to provide cameras; even if their sales just remained steady, the non-availability of other brands would have caused their market share to rise, and

(2) Canon got a little bump in 2016 by winning a bit of the business from normally non-Canon buyers, just by having something to sell.

(3) in 2017, some of that reverted - ie some shops who normally buy mostly Sony went back to buying Sony, and the Canon is now just another body in the shop.

 

[jeffa4444]

The key numbers are not units sold but the operating profit and net profit increases. The holding of the premium price on the 5D MKIV and the launch of the 6D MKII no doubt helped this (as does the launch of new lenses). Despite the fact Canon must invest more in R&D and tooling to make 6 new DSLRs to make profit improvement in an overall falling market point to great cost controls and product customers will pay for all in all a positive outcome for Canon and its user in the form of reinvestment in product.

 

[ahsanford]

The key numbers are not units sold but the operating profit and net profit increases. The holding of the premium price on the 5D MKIV and the launch of the 6D MKII no doubt helped this (as does the launch of new lenses). Despite the fact Canon must invest more in R&D and tooling to make 6 new DSLRs to make profit improvement in an overall falling market point to great cost controls and product customers will pay for all in all a positive outcome for Canon and its user in the form of reinvestment in product.

I was always amazed how well the 5D3 could sustain demand despite Canon not dramatically lowering its MAP for a very long time. So I'm not surprised the 5D4 is similarly holding price well.

But the 6D1 seemed to have the floor drop out on its MAP at a much steeper rate. I'm curious to see the year 2-3 MAP Canon holds that line to. We here at CR seem to care a great deal about the on-chip ADC famously being withheld from the 6D2, but we aren't the market -- perhaps the tilty-flippy + DPAF + touch combo in a FF rig will retain price better than the 6D1 did.

- A

 

[Tugela]

When talking about the competition you have to bear in mind that the market breaks out into subsectors that are not captured in the overall numbers. Sony (and lately Nikon) claim to be leading or doing very well in the FF subsector. Canon produces a lot of entry level ILCs, whereas other companies do not, instead they tend to sell a combination of ILCs and fixed lens to the purchasing group. Sony does not have an entry level product at all. That creates an artificial sense of where Canon really is at in the premium ILC subsector since their numbers are heavily skewed by low margin products that their primary competitors don't care about. Competition for Canon in the low margin consumer product area instead comes from different competitors, such as Panasonic and Fuji.

Because Canon markets products to all subsectors while their competitors focus on specific subsectors, Canon can lead the overall market share even while being beaten in the subsectors. They are just being beaten by different companies in different places. Which is why it is necessary to be cautious in reading too much into the overall percentages.

If you look at only FF cameras I suspect that you will see market trends that are very different.

 

[neuroanatomist]

Because Canon markets products to all subsectors while their competitors focus on specific subsectors, Canon can lead the overall market share even while being beaten in the subsectors. They are just being beaten by different companies in different places. Which is why it is necessary to be cautious in reading too much into the overall percentages.

If you look at only FF cameras I suspect that you will see market trends that are very different.

Is your suspicion based on any actual evidence?

For 2017, Sony announced via press release (i.e., made a big deal of it) that they were #2 in US FF ILC sales for two months of the year (passing Nikon). Nikon then announced via press release that they were #1 in FF ILC sales for one month of the year. Who do you suppose was #1 in FF ILC sales for the other 11 months of 2017? Pentax? : Leica? : :

So, as usual, your 'suspicion' is merely more of your typical rampant speculation based on 'facts' that are completely at odds with reality.

 

[Woody]

It's amazing to see how Canon continues to dominate the market.

 

[Richard CR]

When talking about the competition you have to bear in mind that the market breaks out into subsectors that are not captured in the overall numbers. Sony (and lately Nikon) claim to be leading or doing very well in the FF subsector. Canon produces a lot of entry level ILCs, whereas other companies do not, instead they tend to sell a combination of ILCs and fixed lens to the purchasing group. Sony does not have an entry level product at all. That creates an artificial sense of where Canon really is at in the premium ILC subsector since their numbers are heavily skewed by low margin products that their primary competitors don't care about. Competition for Canon in the low margin consumer product area instead comes from different competitors, such as Panasonic and Fuji.

Because Canon markets products to all subsectors while their competitors focus on specific subsectors, Canon can lead the overall market share even while being beaten in the subsectors. They are just being beaten by different companies in different places. Which is why it is necessary to be cautious in reading too much into the overall percentages.

If you look at only FF cameras I suspect that you will see market trends that are very different.

kind of a strange conclusion to pull out of the air.

canon's OP profit margin for the year was 15.5%

since we don't have year ends for the rest of the industry, we'll go with third quarters for canon and the rest in around the same timeframe for only a quarter.

canon imaging had a 14.5% op profit last quarter.

nikon imaging last quarter had a op profit % of 8.7%

sony IP&S last quarter had a op profit % of 12%

olympus had a op profit % of 4.5%

Canon it seems carries a higher operational profit % to actual sales than anyone else.

so the consideration that canon only does low margin, cheap cameras doesn't seem to be there unless you have some other detailed information than please share, I'd love to see it and incorporate it in the follow up report in a few days time.

then you have full frame. at least in the Americas or in particular NA it seems, canon carried #1 spot for 11 months out of 12. and didn't carry 12 only because Nikon didn't ship D850's until december, so had a double whammy effect during Christmas.

Canon is carrying enough of a lead in markets, they don't feel the need to brag. that alone should say something.

Thom for instance, doesn't think that much of Nikon's announcement..

http://www.dslrbodies.com/newsviews/whos-number-1-this-month.html

 

[Ozarker]

I was going to write a reply, but somebody else already made up the "facts" I was conjuring up to post. *sigh*

 

[ahsanford]

"A few years ago Canon said they were going to release cameras that were more focused, rather than jack-of-all-trades models, and I think that has started to happen and will continue. Expect more of the same in 2018, with an industry leading number of new camera bodies, starting with at least 3 new ones in February."

We're certainly seeing this with the ##D vs. 7D# models in crop.

But this one will be hard to square up at the top of the (non-gripped) FF line. If a 5DS2 comes out with the added throughput we'd expect, we'd have an [on-chip ADC] + [50-70 MP] + [6-7 fps] + [DPAF/touch] + [5D4 AF] camera that would become the jack of all trades camera because there's nothing the 5D4 does that the 5DS2 couldn't also do.

Again, the foresight/bravery to release a 9 fps 5D4 would have solved this problem in advance. Now, it seems the 5D4 is on a fast track to being the middle child in the good/better/best (6D2/5D4/5DS2) future state.

That doesn't seem all that 'focused' to me. It sounds like what Nikon is doing.

- A

 

[Talys]

But this one will be hard to square up at the top of the (non-gripped) FF line. If a 5DS2 comes out with the added throughput we'd expect, we'd have an [on-chip ADC] + [50-70 MP] + [6-7 fps] + [DPAF/touch] + [5D4 AF] camera that would become the jack of all trades camera because there's nothing the 5D4 does that the 5DS2 couldn't also do.

Again, the foresight/bravery to release a 9 fps 5D4 would have solved this problem in advance. Now, it seems the 5D4 is on a fast track to being the middle child in the good/better/best (6D2/5D4/5DS2) future state.

I definitely agree. I think in the end calculus, 5D4 will be a camera that sits between 6D2 and 5Dx that's competitive with D850 in featureset. But, keep in mind, this is a necessity driven by the D850 being generally a great camera that ticks a lot of boxes -- and that's not necessarily a bad thing.

I would be happy with a D850 with an EF mount, RT flash system, Canon's EF mount, DPAF, and Canon's color science I would still prefer 6D2's fully articulating screen, but I could live with a Nikon flip-down.

 

[Diltiazem]

"From a profit perspective, we will work to improve our product mix by raising the proportion of new product sales. Additionally, to reduce costs, we will promote automation and in-house production as well as accelerate sales of mirrorless cameras thereby benefiting from lower cost of sales through volume effect."

Good news for mirrorless lovers.

 

[tmroper]

The holding of the premium price on the 5D MKIV and the launch of the 6D MKII no doubt helped this (as does the launch of new lenses).

But the 5D MKIV has been available on the gray market for around $2500 for awhile now. ($2,479.99 from "DealsAllYear" right now on Ebay). That seems to be greater discount than I remember for the MKIII, but in any event, it must have helped sales.

 

[ahsanford]

"From a profit perspective, we will work to improve our product mix by raising the proportion of new product sales. Additionally, to reduce costs, we will promote automation and in-house production as well as accelerate sales of mirrorless cameras thereby benefiting from lower cost of sales through volume effect."

Good news for mirrorless lovers.

Pushing mirrorless is a no-brainer -- the market is headed that way, it plays to the future seamless stills/video world, mirrorless cameras should be cheaper/easier to build so for a given market price they will have higher profit margins, etc.

But how and when to push mirrorless, however, is a quandary for the bigger companies. At some point, Rebels will pitch their mirrors (not now, but someday), then the XXD line, and so on until mirrors are only in the most demanding market segments (e.g. 1-series). How Canon chooses to do that, when Canon chooses to do that will have to be very carefully thought out.

- A

 

[rrcphoto]

The holding of the premium price on the 5D MKIV and the launch of the 6D MKII no doubt helped this (as does the launch of new lenses).

But the 5D MKIV has been available on the gray market for around $2500 for awhile now. ($2,479.99 from "DealsAllYear" right now on Ebay). That seems to be greater discount than I remember for the MKIII, but in any event, it must have helped sales.

grey market is more to do with currency variations than anything canon is responsible for.

 

[blobmonster]

They're financial results for the fiscal year. Fiscal means tax, and they're not tax results, even though tax is a part of them. Sorry to be the financial vocabulary person, and thanks for a great site!

 

[Tugela]

"From a profit perspective, we will work to improve our product mix by raising the proportion of new product sales. Additionally, to reduce costs, we will promote automation and in-house production as well as accelerate sales of mirrorless cameras thereby benefiting from lower cost of sales through volume effect."

Good news for mirrorless lovers.

Pushing mirrorless is a no-brainer -- the market is headed that way, it plays to the future seamless stills/video world, mirrorless cameras should be cheaper/easier to build so for a given market price they will have higher profit margins, etc.

But how and when to push mirrorless, however, is a quandary for the bigger companies. At some point, Rebels will pitch their mirrors (not now, but someday), then the XXD line, and so on until mirrors are only in the most demanding market segments (e.g. 1-series). How Canon chooses to do that, when Canon chooses to do that will have to be very carefully thought out.

- A

Frankly, I am surprised that the Rebels have not ditched their mirrors years ago. You would think that it is limiting to that line, a MILC would be a more sensible option.

 

[Tugela]

Because Canon markets products to all subsectors while their competitors focus on specific subsectors, Canon can lead the overall market share even while being beaten in the subsectors. They are just being beaten by different companies in different places. Which is why it is necessary to be cautious in reading too much into the overall percentages.

If you look at only FF cameras I suspect that you will see market trends that are very different.

Is your suspicion based on any actual evidence?

For 2017, Sony announced via press release (i.e., made a big deal of it) that they were #2 in US FF ILC sales for two months of the year (passing Nikon). Nikon then announced via press release that they were #1 in FF ILC sales for one month of the year. Who do you suppose was #1 in FF ILC sales for the other 11 months of 2017? Pentax? : Leica? : :

So, as usual, your 'suspicion' is merely more of your typical rampant speculation based on 'facts' that are completely at odds with reality.

Does not change the fact that the OP was comparing apples to oranges and you know it. Canon's data is a conflation of many market spaces, whereas competitors have more targeted market spaces. Where Canon is positioned in the overall market therefore does not reflect how they are positioned in specific markets. Or is this concept too complex to understand?

If Sony were #2 in FF in the US, where MILCs are less popular, where do you think they ranked in other markets where MILCs are more popular? DSLR sales are dropping at a steady pace (around 9-10% per year), MILC sales are rising, and if this is not being driven by the NA market, it is being driven by other markets. That differential has to come from somewhere, and if it is not in NA then the differential is much more dramatic in places like Asia. For a camera company that is looking for growth potential, which market do you think they are likely to find it?

There are forces at play here that you clearly do not get. While you do not understand, both Canon and Nikon do, which is why both of them are likely to produce some sort of FF/APS-C MILC in the near future even if it is not as good as what companies like Sony and the others are making. There is a reason for them doing that, namely that they understand the market direction even if you do not.