Canon did publish the new Q2 financial results (see here). As a whole the company had a -56% in gross profit. Canon blames external factors like U.S.-China trade friction and economic slowdown in China and Europe for this bad result.
But if we digg into the camera business segment it’s clear that at least in this segment the failure is due their own acts. The imaging business reported a -18,5% in sales and -64% in profit. Canon says this happened because of DSLR market contraction, particularly for entry-class models. But in their more detailed report they also admit sales in the Full Frame segment were lower than expected which probably means the Canon EOS-R and EOS-RP sales weren’t that good.
Here is what they write:
Looking at interchangeable-lens cameras, in addition to market contraction centered on entry-class DSLRs, in 2018 we launched three new products that led to a high level of sales in the second quarter of last year. As a result, unit sales for the second quarter this year were down 22% to 1.08 million. Against this backdrop, we successively launched strategic full-frame models into the mirrorless camera market from the second half of last year. The introduction of a high-end model, further heightened our presence in the market and at the same time had a positive impact on overall sales of our mirrorless cameras.
On the other hand, in the full-frame category of the market where price competition is increasing, as a result of prioritizing profitability, unit sales were below our target. However, for interchangeable-lens cameras overall, our unit sales were in line with our plan. As a result, we retained our full-year projection for unit sales. In terms of revenue, we did lower our projection to reflect a change in product mix to our plan.
However, in the second half of the year we will stimulate sales through the launch of new lenses. Specifically, we will enhance our lineup launching 5 new lenses for mirrorless cameras. Through kit sales that leverage our broad range of mirrorless camera lenses and by bundling cameras with accessories like our lens adapter that makes it possible to use our existing rich lens lineup we will promote further expansion of mirrorless camera sales. In addition, we will further strengthen our efforts to generate user interest in our mirrorless cameras. As a large percentage of high-end models purchases involve the customer actually handling the model and trying it out before buying, in major cities in Japan and other markets, we will create even more touch points for users, proactively expanding opportunities to actually experience our products. Additionally, for professional photographers, we will foster trust in our products, offering, among others, enhanced support at international sports events. Through these measures, we will further raise our presence in the market for high-end models, which will also have a rippling effect on more volume oriented cameras and subsequently link this to a further boost in sales.
As for compact cameras, sales were in line with our plan. As such, we maintain our full-year unit sales projection. Through the launch of new products, we will raise the proportion of sales attributable to premium G series models and link this to improved profitability.
Canon has also revised down their forecast:
They are now paying the price for the lack of innovation and their classic conservative Leader attitude.