JAPAN’S Canon yesterday reported first-quarter net profit that fell almost a third, grossly undershooting expectations, citing a collapse in demand for compact digital cameras.
Profit at the world’s largest camera maker fell to 33.93bn yen (£188m) for January to March, compared with the 53.64bn yen average estimate of five analysts according to Thomson Reuters data.
The result comes as Canon contends with a shift in consumer preference toward increasingly capable smartphone cameras. That shift has dragged Canon’s compact sales down nearly 70 per cent since the market’s peak in 2008 – the year after Apple released its game-changing iPhone.
“Sales volume for low-end (digital camera) models declined due to the ongoing contraction of the market in all regions from the previous year,” said Canon in its earnings release. It did not specify first-quarter compact sales, but lowered its 2015 forecast to 7m cameras from 7.8 m, or 23 per cent less than 2014. It projected sales of higher-end cameras with interchangeable lenses at 5.8m rather than 6.4m, representing a 9.4 per cent on-year decline.
Canon also said, without elaborating, that first-quarter net profit was brought down by an increase in its effective tax rate as well as a euro which fell 11 per cent against the yen.
Canon has been seeking growth opportunities to offset shrinking demand for cameras, and compacts in particular. It plans to buy Swedish surveillance firm Axis AB for $2.7bn (£1.7bn) – offering 340 crowns a share until the extended deadline of 5 May – and as of Friday owned 84 per cent. It does not plan to up its offer even though hedge fund Elliott Management has raised its ownership to 10 per cent.