Throughout 2012, Canon CAJ noted that the effects of the European financial crisis were widely felt, affecting global demand. Signs of improvement in the U.S. were more than offset by spreading weakness in demand in Europe and slowdowns in emerging countries such as China and India. This global weakness led to a revenue decline of 2.2% and a decline in operating margins to 9.3% from 10.6%.
Demand for most product groups was mixed, but mostly constrained by a weak global economy. Office color multifunction devices showed growth, which was more than offset by demand for laser printers. Global demand for interchangeable lens digital cameras remained strong, but demand for compact digital cameras weakened across developed countries and some emerging markets. Demand for semiconductor lithography equipment remained weak as capital investment remained constrained.
Management’s outlook for 2013 anticipates continuing challenging economic conditions. In general, management expects the trends reported for 2012 to continue: Demand for multifunction devices is expected to remain strong, sales of interchangeable-lens digital cameras are expected to grow, compacts are expected to decline due to increased adoption of smartphones, and capital investment by customers is likely to remain restrained, leading to sluggish demand. We note that the recent rapid depreciation of the Japanese Yen relative to the U.S. dollar (15.1% since the end of 2012) should give results a boost, with 80% of sales outside Japan, but almost 60% manufacturing located within Japan.
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