Pixiq

In spite of the sluggish economy, Canon Inc. in Tokyo reported an 87% increase in worldwide net profits for 2010. While much of the ($3.04 billion US) profit was related to office equipment, the sale of photographic products definitely contributed. According to a spokesperson, "... the demand for digital SLR cameras maintained healthy growth across global markets."

The results for the full 12 months are certainly impressive but the company's financial report admits that October-December 2010 was less than stellar. During that quarter, net profit actually declined by 12% because of higher marketing expenses and declining prices of compact digital cameras.

Looking Ahead to 2011: Even so, the financial report predicts a fairly rosy 2011, with an increase of 10.6% in overall sales but a more healthy increase of 25.7% in net profit. It's also worth noting that the company expects to sell 30 million digital cameras (worldwide) in 2011 and believes that the demand for digital SLRs, compact cameras and inkjet printers will continue to grow.

It's no secret that the profit on point-and-shoot models is substanially lower than for DSLRs; this applies to every manufacturer. As well, digicams rarely lead to the sale of accessories such as flash units and lenses.  By comparison the digital SLRs -- as well as inkjet printers -- are more profitable in the long run because  they generate sales of add-ons and ink cartridges. The latter is a particularly lucrative cagegory.

The Formula for Success: In general, Canon Inc. attributed the increase in both sales and profits to ongoing cost-cutting efforts and the launch of new products. Presumably both initiatives will continue in 2011 since Canon Inc. is also relatively bullish about global sales and profit for this year.

Adressing the Emerging Markets: According to Canon Inc. president Toshizo Tanaka, "The entire world economy will recover moderately in 2011. From the second half and onward, industrial countries including the United States will accelerate their recovery."

On the other hand, the financial report concedes that the "engine of growth" has shifted from developed countries to the emerging markets, such as India and China. Consequently, the company is already making plans for the  "transformations" that will more effectively address sales and service in those countries and across Southeast Asia.

Ambitious Future Plan: Canon Inc. has filed an aggressive new five-year plan: Aiming for the Summit – Speed & Sound Growth, well summarized by Photo Radar at  http://www.photoradar.com/news/story/canon-sets-out-5-year-strategy. In a nutshell, the company hopes to achieve an "overwhelming" number one position in all its core businesses and to reach net sales of more than 5 trillion yen ($61 billion US) by 2015.

UPDATE Feb. 3, 2011 Nikon (in Japan) has released its financial results for the three Quarters ending Dec. 31, 2010. In a nutshell sales were up but profit was down (compared to the first three quarters of 2009). Sales of DSLR cameras were up by 300,000 units. Sales of lenses were up by 600,000 units and the company sold 2.3 million more digicams.