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Canon USA Makes Changes to Its Management

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Price movement

Canon (CAJ) has a market cap of $37.8 billion. It rose by 1.6% to close at $28.64 per share on July 11, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.99%, -0.97%, and -5.0%, respectively, that day. CAJ is trading 0.07% below its 20-day moving average, 0.56% above its 50-day moving average, and 2.3% below its 200-day moving average.

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Related ETF and peers

The Vanguard FTSE Pacific ETF (VPL) invests 0.67% of its holdings in Canon. The ETF tracks the FTSE Developed Asia Pacific Index, a market-cap weighted index of securities in the developed markets of the Pacific region. The YTD price movement of VPL was 2.0% on July 11.

The market caps of Canon’s competitors are as follows:

  • HP (HPQ): $22.6 billion
  • Kyocera (KYO): $18.1 billion
  • Xerox (XRX): $9.5 billion

Canon’s key changes

Nobuhiko Kitajima has been promoted to vice president and general manager of the business imaging solutions group. Kitajima will take responsibility for Canon’s large format solutions, image capturing products, mixed reality products, and the DreamLabo production photo printer.

N. Scott Millar has been appointed vice president and general manager of corporate human resources. Millar will take responsibility for talent acquisition, talent and leadership development, total rewards, employee engagement, and HR (human resource) operations and support.

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Canon’s performance in fiscal 1Q16

Canon (CAJ) reported fiscal 1Q16 net sales of 797.2 billion Japanese yen, a decline of 7.0% from the net sales of 857.4 billion yen in fiscal 1Q15. Sales of office and imaging system units fell by 14.1% and 10.6%, respectively. Industry and other sales rose by 45.8% between fiscals 1Q15 and 1Q16.

Its net income and EPS (earnings per share) fell to 28.0 billion yen and 25.6 yen, respectively, in fiscal 1Q16, compared with 33.9 billion yen and 31.1 yen in fiscal 1Q15. Canon’s cash and cash equivalents fell by 8.3% and its inventories rose by 3.9% between fiscals 4Q15 and 1Q16. In fiscal 1Q16, its current ratio fell to 1.3x and its debt-to-equity ratio rose to 0.60x, compared with 2.5x and 0.39x, respectively, in fiscal 4Q15.

Projections

Canon (CAJ) made the following projections for fiscal 2016:

  • net sales of 3.6 trillion yen, a decline of 5.3% from fiscal 2015
  • operating profit of 300.0 billion yen, a decline of 15.5% from fiscal 2015
  • net income of 200.0 billion yen, a decline of 9.2% from fiscal 2015

These declines in performance are mainly due to the global economic slowdown and decline in oil prices, which restrict the ability of the United States to raise interest rates. The overall effect has been the strengthening of the yen since the beginning of 2016. In the next part, we’ll look at PACCAR.

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