Canon has revealed its financial results for the second quarter of 2015, confirming a drop in profits of almost 16% following further disappointments in the digital imaging sector.
In recent times, Sony has said that its mirrorless camera sales have increased and that the company is expecting the trend to continue in the future. On the other hand, things are not looking good for Canon and Nikon, the two giants of the digital imaging industry. The former has just revealed its financial results for the quarter ending on June 30, 2015, but its report is not looking good as profits have fallen and they will continue to decline by the end of this year, as DSLRs and compact cameras are still struggling in some key markets.
16% profit decline revealed in Canon Q2 2015 financial report
The second quarter of the year has brought about 974 billion yen / $7.8 billion in sales, a 5.1% increase when compared to the same quarter in 2014. However, the profits have decreased by about 16%.
In Q2 2014, the Japan-based manufacturer has reported 80.8 billion yen / $653.5 million on 926.8 billion yen / $7.49 billion sales. As stated above, the sales have increased in Q2 2015 compared to Q2 2015 but the profit has declined by 15.7% to 68.2 billion yen / $551.5 million.
The digital camera maker did not expect such a major decline. As a result, the profit outlook for the year 2015 has been reduced by 10 billion yen / $80.8 million to 245 billion yen / $1.9 billion.
Why is Canon’s profit plummeting?
In the Canon Q2 2015 financial report, the company has revealed a few reasons why its profit has declined in this period. First of all, although sales have increased, the manufacturer has increased its development expenses, so the overall costs have increased.
Moreover, digital camera sales are down almost everywhere. Sales in Japan and US have remained solid, but they have dropped in Europe and in emerging markets. In total, digital camera sales are down by 20% in Q2 2015 versus Q2 2014.
The major blow was once again provided by the compact camera market as sales of these shooters have dropped by 27%. Interchangeable lens cameras have done a bit better, but their sales were still down by 9% this year compared to the previous year.
The increase in expenses has also been given by a weaker yen compared to the dollar. If the yen continues to weaken, then the Japanese manufacturer may continue to suffer a decline in profits.
Canon has updated its digital camera sales projection for 2015, too. The company is expecting a 17% drop in sales due to selling 22% fewer compacts and 9% fewer ILCs in 2015 compared to 2014. Analysts are expecting a similar outlook, but the 5DS and 5DS R have recently become available and they could give the company a much-needed sales boost.