Canon has published its first quarter financial results for 2019, and it doesn’t make for pleasant reading. The Imaging Unit reported an 81.6% collapse in operating profit from Q1 2018, on the back of a 23% drop in camera sales over the same period.
That amounts to a decline from ¥25.7 billion ($229.8 million / £178.4 million) last year to ¥4.7 billion ($42 million / £32.6 million) this year. This doesn’t take into account a further ¥1.9 billion ($16.9 million / £13.2 million) deficit in operating profit from broadcast and cinema cameras, which were assigned away from the Imaging Unit.
As foreshadowed by Canon CEO Fujio Mitarai’s now infamous prognostication that the camera market could shrink by half in two years, the company reiterated that the decline will be ongoing and is due to smartphones.
“… we expect the market contraction to continue for another two to three years, due to the rise of the smartphones," notes the report. "That said, there is a portion of the market that will certainly remain, in particular segments serving the needs of professionals and advanced amateurs.
“Therefore, in order to defend our top market share position, we will sustain our maximum business efforts. At the same time, we are taking measures to shift our business focus toward B2B, expanding our business sphere to automotive and industry use.”
The company cited external factors such as the economic slowdown in China and Europe, and the continued uncertainty surrounding Brexit. “Additionally, even in our business areas, for interchangeable-lens cameras we saw rapid contraction of the DSLR market due to the rise of smartphones, and the overall market shrank as sales of mirrorless cameras could not cover this drop.”
Is mirrorless the answer?
Sales of Interchangeable-lens cameras were down 19%, to 850,000 units over the 12-month period. To put that into perspective, Fujifilm sold almost 900,000 instax cameras every month over a similar period of time. Canon cited “accelerated market contraction” for DSLRs, especially entry level cameras, as well as the economic lull in the lucrative Chinese market.
“For the market overall, however, we expect the trend of market contraction to continue for some time. In light of these circumstances, we decided to reexamine our full-year projections for the market and our own unit sales. We now expect the market and our own unit sales to decline 17% to 8.6 million units and 4.2 million units, respectively.”
Accordingly, the company has identified mirrorless cameras and particularly the RF mount systems as its future. “Amid this situation, we will steadily shift our focus from DSLR to mirrorless cameras with the aim of maintaining our overwhelming competitiveness, which we have built upon DSLRs.”
It noted that sales of the Canon EOS RP “got off to a flying start”, speaking to the fact that “particularly high growth continues” in the full-frame sensor category, including mirrorless models.
“The market for entry level DSLRs is contracting at a pace that exceeds the outlook we had at the beginning of the year. That said, we expect the user base of professionals and advanced-amateur, people who value the image quality and expressive possibilities afforded by cameras with large sensors and an abundance of interchangeable-lenses to remain.”