Canon Q1 Earnings Call offers clues about new cameras

Started Apr 25, 2008 | Discussions thread
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steevithak New Member • Posts: 12
Canon Q1 Earnings Call offers clues about new cameras

I'm not sure how many of you follow stocks but Canon had an earnings call yesterday. Most of it covered their main businesses like printers and other business products but they did mention their camera strategy for the remainder of 2008 and offer a few clues about what's coming. Sounds like new cameras will definitely be announced before long. I've copied the interesting bits below. You can read the full transcript here;

http://seekingalpha.com/article/73884-canon-inc-q1-2008-earnings-call-transcript?source=yahoo&page=-1

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Our new cameras, we expect new models to begin contributing to sales from the second quarter, which is basically inline with our original trend. Furthermore, 10 strategic new products that we will steadily launch from the second quarter will contribute to sales expansion. We expect to achieve our previous projections.
...

Next slide we'll discuss Cameras starting with digital cameras. In 2008, we expect the digital camera market to grow by around 10% to 129 million units including 8.8 million digital SLR cameras. Amid this market condition, we expect to realize higher than market growth through the launch of competitive new products. Our unit sales projection continues to be 29.4 million units, including 4.4 million SLRs, representing unit growth of 20%.
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As for Cameras, by maintaining our price premiums through the launch of competitive new products and improvement in our product mix and the proportion of such products of SLRs and interchangeable lenses increases as well as continued cost reduction, we aim to accelerate the improvement in profit structure as we look towards the second half. As these initiatives and events unfold from the second quarter, we expect to negate the impact of stronger yen and increase profit for the full year.

--- Later in the Q & A:

Unidentified Analyst

I see that you're forecasting quite a significant improvement to Camera margins for the second half of this year. I wonder if you could provide some more detail as to how you expect that margin improvement to occur.

Masahiro Osawa - Managing Director, Group Executive; Finance and Accounting Headquarters

It was in the second part, I mean the latter part of March when we launched new products into the market. So, up until the first half of March; that is in January, February and also again the first part of March, we had to compete with our competitors with our existing models which we had launched last year. When it comes to this year, our competitors have launched their new products ahead of us. Again in Q1, we had to compete with our competitors with our existing products, again launched last year. So, we had this impact resulting from the appreciation of the yen. We also have this increase in depreciation charges. We also had to respond to our competitors' initiatives to lower their prices with our existing products. That should explain the reason why with the margin deterioration in Q1.

The yen strengthened a lot more than we initially expected in the month of March and we do anticipate some impact to continue into the second quarter resulting from the appreciation of the yen. But again, in the latter part of March, we did launch new products, which are very competitive and which are higher margin products for us. And these newly launched products are being gradually accepted in the market. But again, in the early part of the second quarter, we do anticipate some impact to remain resulting from the appreciation of the yen. But, we do hope that margin should improve in Q3 and Q4.

And talking of new products actually, those SLR new products, which we have launched, are very competitive and they actually improve our product mix with which we should be able to exert our price premiums. So, these should explain the reason why we are anticipating improvement in margin in the second half.

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