ENVALITH
キヤノン株式会社 logo

CANON INC.

7751・Prime Market・Electric Appliances

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キヤノン株式会社 logo
CANON INC.7751

Business

Canon originated as a camera manufacturer founded in 1937 and is now a global manufacturing group comprising 321 consolidated subsidiaries and 8 equity-method affiliates. The company operates across four segments: Printing (multifunction devices and printers), Medical (medical equipment such as CT and MRI systems), Imaging (cameras and network cameras), and Industrial (Semiconductor and FPD Lithography Equipment), with overseas sales accounting for 79.2% of total revenue. Its major customers span a wide range, including offices, the printing industry, medical institutions, video creators, and semiconductor manufacturers, with HP Inc. being its largest customer, accounting for 9.6% of sales. Revenue for FY2025 reached ¥4,624,727 million, marking a record high for the second consecutive fiscal year.

Business Model

The company employs a hybrid model combining equipment (product) sales with service revenue from maintenance, consumables, and related offerings. In FY2025, product sales totaled ¥3,673,200 million (up 2.2% year on year), while service sales totaled ¥951,500 million (up 3.9% year on year). The company has built a stable revenue base by leveraging usage-based service contracts in Printing, post-installation maintenance contracts in Medical, and progress-based revenue recognition under long-term contracts in Industrial. Development and production are handled primarily by domestic group companies, while sales are conducted through regional sales subsidiaries, forming a vertically integrated value chain.

Company Strengths

Established a technology management framework leveraging optical technology, image-processing technology, and precision-machining expertise across the entire company. R&D expenses reached ¥339,288 million (FY2025), allocated across businesses as follows: Printing ¥94,762 million, Imaging ¥112,298 million, Medical ¥46,971 million, and Industrial ¥32,286 million. Cross-licensing agreements with HP Inc., IBM, Kodak, and others also underpin the company's competitive advantage.

Imaging Business Unit's FY2025 net sales were ¥1,054,900 million (up 12.5% year on year). In cameras, products aimed at video creators such as the EOS R50 V and PowerShot V1 captured demand among younger users, driving sales growth. In network cameras, centered on Axis Communications AB, the company launched products featuring newly developed chips, achieving sales of ¥429,100 million, up 20.1% year on year.

The Medical Business Unit, which recorded an operating loss of ¥140.4 billion in FY2024 due to a goodwill impairment loss, returned to profitability in FY2025 with operating income of ¥32,800 million. Reforms in development, production, and procurement led by the Medical Business Innovation Committee reduced cost of sales and operating expenses by 22.8% year on year to ¥547,800 million. The impairment test conducted in the fourth quarter of FY2025 also confirmed no impairment was necessary.

ENVALITH's Perspective

Operating profit for Q1 FY2026 (ending December 2026) fell sharply to ¥71,370 million, down 26.1% year on year. Despite a 3.3% increase in revenue, the cost-of-sales ratio deteriorated from 52.7% to 53.8%, and selling, general and administrative expenses (+¥23,606 million) and R&D expenses (+¥5,907 million) increased substantially, which were the main causes. The full-year forecast remains unchanged at operating profit of ¥456,000 million (+0.1% year on year), a plan premised on a recovery in the second half, but careful assessment is needed regarding the sustainability of the cost increases.

The Imaging segment posted strong growth with revenue up 15.9%, while operating profit declined 11.1% year on year to ¥27,767 million, as R&D expenses rose 33.4%. This can be interpreted as a stage where growth investment is running ahead, but the timing of monetization remains a challenge. The Industrial segment saw operating profit fall sharply by 42.6% year on year to ¥4,811 million; despite the external tailwind of AI-related semiconductor demand, deterioration in the cost-of-sales ratio (from 55.9% to 62.3%) is weighing heavily on results. Confirmation of order trends is essential.

In Q1 FY2026 (ending December 2026), the company conducted share buybacks of ¥46,169 million, bringing the treasury shares outstanding at period-end to 465,175,943 shares (34.9% of shares issued). The dividend policy remains at an annual ¥160 (targeting a payout ratio of 40%), demonstrating a clear commitment to shareholder returns. On the other hand, short-term borrowings and long-term debt due within one year increased substantially from ¥511,139 million to ¥700,083 million, and the shareholders' equity ratio declined from 56.9% to 55.0%. Operating cash flow fell sharply to ¥24,509 million from ¥71,942 million in the same period of the previous year, and changes in financial flexibility warrant close monitoring.

Growth Strategy

Under Phase VII, the company is driving productivity innovation while shifting its strategic focus toward growth areas (Medical, Industrial, and Imaging).

Under the Excellent Global Corporation Group Plan Phase VII, the company is promoting the consolidation of production sites and greater use of outsourcing. From January 2026, the depreciation method was changed from the declining-balance method to the straight-line method, achieving a reduction in depreciation expenses of ¥6,082 million in the first quarter. Useful lives of certain machinery and equipment have also been revised, aiming to level out costs over time.

The company is advancing growth through two pillars: the launch of new EOS R series mirrorless cameras and the expansion of the network camera business by Axis Communications AB. Net sales to external customers in the first quarter of FY2026 (ending March 2026) reached ¥245,805 million, up 16.0% year on year. R&D expenses increased by 33.4%, accelerating investment in next-generation products.

The company is promoting the use of new distributors in the United States and increasing sales in emerging markets such as the Middle East and South America. Net sales to external customers in the first quarter of FY2026 (ending March 2026) were ¥141,856 million, up 3.4% year on year, continuing stable growth. However, operating profit declined 22.2% year on year to ¥5,215 million, with the increase in other operating expenses (+9.3%) remaining a challenge.

The company is promoting the commercialization of lithography equipment for advanced back-end processes and Nanoimprint Lithography (NIL) technology, driven by demand for AI-related semiconductors. Capital expenditures in the first quarter of FY2026 (ending March 2026) rose sharply, up 148.5% year on year to ¥4,815 million. Meanwhile, operating profit fell 42.6% year on year to ¥4,811 million, remaining sluggish, with the transition to an investment recovery phase posing a challenge.

The company has announced its policy to maintain an annual dividend of ¥160 per share (targeting a payout ratio of approximately 40%) for FY2026 (ending March 2026) as well. During the first quarter of FY2026, the company repurchased ¥46,169 million worth of treasury shares, bringing the cumulative number of treasury shares to 465,175,943. This demonstrates a clear commitment to stable and proactive profit distribution without reducing the dividend amount.

Last updated: July 17, 2026