8060.T

Core Financial Results Highlights

• Q4 2025: Achieved year-over-year revenue and profit growth; operating profit, ordinary profit, and net profit all hit new all-time quarterly highs, as did profit margin. Total Q4 revenue was 188.0 billion yen, up 4% YoY; operating profit was 20.0 billion yen, up 3.2 billion yen YoY; net profit attributable to parent shareholders was 14.2 billion yen, up 1.8 billion yen YoY. Gross profit increased 2.3 billion yen, with gross margin improving from strong high-value IT solutions in Enterprise and strong industrial equipment in Professional; SG&A expenses remained flat YoY.
• Full year 2025: Marked 5 consecutive years of revenue and profit growth; operating profit, ordinary profit, and net profit all hit new all-time annual highs, as did ordinary and net profit margin. Revenue grew driven by steady IT solutions performance; gross profit increased 8.3 billion yen YoY, though gross margin worsened slightly due to higher sales share of lower-margin IT product/system sales in the Consumer segment. SG&A expenses increased 1.8 billion yen due to higher goodwill amortization, and increased SE/logistics costs from more active business negotiations.

All Q4 segments achieved revenue and profit growth, with all segments posting operating profit margins above 10%.

Operational Updates

• Merged TCS into Canon IT Solutions in July 2025, with prior year comparative results restated.
• Primagest integration has delivered expected synergies, with new large financial project wins in Q4 2025.
• SFA tool deployment in Area segment improved sales efficiency and revenue per client, with plans to further expand this initiative.
• Group-wide: Strength in security solutions (ESET anti-virus/ransomware protection) with growing demand; recurring revenue business (Makasete IT) continues to grow steadily, driving margin improvements.

Capital and Shareholder Return Policies

• Dividend policy targets a consolidated payout ratio of 40% or higher, with dividends set based on medium-term profit outlook, investment plans, and cash flow. 2025 full-year EPS reached 381 yen following active capital policies including share repurchases and policy holding share sales. The year-end dividend was raised 10 yen from the October forecast to 100 yen per share, bringing full-year 2025 dividend to 170 yen per share, a 30 yen increase from the prior year. 2026 full-year dividend is forecast at 180 yen per share.
• A 1-for-2 stock split is approved: the current share investment unit exceeds the Tokyo Stock Exchange's recommended 500,000 yen threshold for accessible retail investment; the split will lower the investment unit price, improve liquidity, and expand the investor base.
• A new 30 billion yen share repurchase program is approved, to be executed via market purchases from February 2 to October 30. The program aims to improve capital efficiency and ROE by compressing equity; the company previously hit its long-term ROE target of 10% following prior share repurchases and policy holding sales. The company will continue active capital policy and dialogue with capital markets to improve corporate value.

• Full year 2026 (Dec term) group consolidated guidance: Total revenue 685.0 billion yen, up 1% year-over-year; operating profit 60.0 billion yen, up 1.8 billion yen year-over-year. The company targets 6 consecutive years of revenue and profit growth.
• Segment-level 2026 guidance:
  • Enterprise Segment: Forecast 275.4 billion yen revenue (up 4% YoY) and 22.4 billion yen operating profit (up 1.3 billion yen YoY), targeting increased revenue and profit. Canon products sales are expected to remain flat YoY: continued paperless trends will reduce office MFP unit sales and laser printer cartridge sales, but laser printer unit sales will grow from large projects and office MFP maintenance will see a slight increase from higher operating units. IT solutions sales are expected to grow: despite lapsing of large prior-year文教 and financial PC projects, SI projects for financial and manufacturing industries at Canon IT Solutions, and BPO at Canon Marketing Japan and Primagest are expected to perform strongly.
  • Area Segment: Forecast 235.5 billion yen revenue (down 2% YoY) and 22.3 billion yen operating profit (flat YoY). Canon products sales are expected to see a slight decline: paperless trends will reduce office MFP maintenance and laser printer unit sales, but combined IT solutions proposals will drive office MFP unit growth, limiting the overall decline. IT solutions sales are expected to decline: despite steady growth for security solutions and Makasete IT, the large spike in 2025 PC sales from the end of Windows 10 extended support will create a difficult year-over-year comparison that drives an overall sales decline. SG&A increases will be offset by improved gross margin to keep operating profit flat.
  • Consumer Segment: Forecast 142.6 billion yen revenue (down 2% YoY) and 13.0 billion yen operating profit (flat YoY). Interchangeable-lens digital camera and RF lens sales are expected to grow, driven by increased shipments of the EOS R6 Mark III and mid-to-high end EOS R series models amid the shift to mirrorless cameras. Inkjet printers and ink cartridges are expected to see sales decline amid continued market shrinkage. IT product sales are expected to decline due to the 2025 PC spike comparison, plus concerns over unstable PC supply from memory constraints and demand decline from price increases. Sales-driven revenue decline will be offset by improved gross margin to keep operating profit flat.
  • Professional Segment: Forecast 49.0 billion yen revenue (slight increase YoY) and 5.0 billion yen operating profit (down 0.5 billion yen YoY), forecasting increased revenue but lower profit. Production printing sales are expected to grow from expanded sales of high-speed continuous and cut sheet printers. Healthcare sales are expected to remain flat YoY, with multiple hospital projects scheduled for service launch in 2026. Industrial equipment sales are expected to decline from lower semiconductor-related inspection/measurement project volume; all 2026 planned projects are already booked, and the company is actively pursuing new business for 2027 and beyond. Lower industrial equipment gross profit will drive an overall operating profit decline despite slight revenue growth.
• Key product-level 2026 forecasts:
  • Interchangeable-lens digital cameras: +3% YoY; inkjet printers: -4% YoY; ink cartridges: -4% YoY
  • Office MFPs: +4% YoY; maintenance services: -1% YoY; laser printers: +8% YoY; laser printer cartridges: -2% YoY
  • Commercial printing: flat YoY; network cameras: +15% YoY, driven by growing demand for security/IoT security and active proposals for XProtect video management and VisualStage cloud recording

Q4 2025 (Oct-Dec) performance:

1. Consumer Segment: Revenue of 47.4 billion yen, up 2% year-over-year. Operating profit of 5.7 billion yen, up 0.2 billion yen year-over-year. Revenue contribution to total Q4 revenue is ~25.2%. Key product performance: Interchangeable-lens digital camera unit sales up 19% YoY driven by the newly launched EOS R6 Mark III; exchange lens sales increased sharply due to new product launches; compact camera sales rose from recovered supply and new product launches; inkjet printer unit sales were flat YoY due to timing of new product launches; ink cartridge sales declined amid shrinking print volume; IT product sales increased driven by strong demand for PC peripherals (portable SSDs) and high-performance PCs amid supply constraints and price hike concerns.

2. Enterprise Segment: Revenue of 68.6 billion yen, up 0.5% year-over-year. Operating profit of 7.0 billion yen, up 0.7 billion yen year-over-year. Revenue contribution to total Q4 revenue is ~36.5%. Key details: Canon products overall sales down 1% YoY: office MFP unit sales increased sharply from multiple large projects despite continued paperless trends reducing maintenance service and laser printer cartridge sales; IT solutions sales up 1% YoY: despite the lapsing of a large文教 PC project from the prior year, manufacturing and financial industry SI projects performed strongly. Main subsidiary Canon IT Solutions achieved revenue of 37.4 billion yen (up 1% YoY) and operating profit of 4.7 billion yen (up 1.1 billion yen YoY), supported by improved gross margin from stabilization of unprofitable projects. Total orders rose 3% YoY; order backlog fell 11% YoY due to completion of large data center projects, but non-data center order backlog hit a new all-time high, up 1% YoY. Recently acquired Primagest saw Q4 sales decline from lapsing of a large prior-year financial project, but achieved full-year sales growth and realized expected synergies with new financial project orders in Q4.

3. Area Segment: Revenue of 61.9 billion yen, up 5% year-over-year. Operating profit of 6.2 billion yen, up 1.2 billion yen year-over-year. Revenue contribution to total Q4 revenue is ~32.9%. Key details: Canon products overall sales up 1% YoY: office MFP maintenance sales declined amid paperless trends, but office MFP unit sales increased from active client efficiency improvement proposals; laser printer unit sales and laser printer cartridge sales rose from large orders, and imageFORCE light production models for in-office in-house printing sold strongly. IT solutions sales up 15% YoY: sustained replacement demand for business PCs following the end of Windows 10 extended support, paired with growing contract volume for Makasete IT (total support for SME sustainable management and DX promotion), security products (ransomware protection, HOME cloud IT support) drove growth. Main subsidiary Canon System and Support achieved revenue of 28.8 billion yen (up 8% YoY) and operating profit of 2.6 billion yen (up 0.8 billion yen YoY), with improved operating profit driven by steady growth of recurring revenue from Makasete IT. SFA implementation improved sales efficiency, increasing revenue per client.

4. Professional Segment: Revenue of 13.9 billion yen, up 26% year-over-year. Operating profit of 1.9 billion yen, up 1.4 billion yen year-over-year. Revenue contribution to total Q4 revenue is ~7.4%. Key details: Production printing sales fell 14% YoY after lapsing of multiple large high-speed continuous feed printer projects from the prior year; main subsidiary Canon Production Printing Systems achieved revenue of 2.6 billion yen (down 14% YoY) and operating profit of 0.1 billion yen (up 20 million yen YoY) from improved gross margin and reduced selling, general and administrative (SG&A) expenses. Industrial equipment sales rose 81% YoY driven by large semiconductor manufacturing inspection/measurement device projects. Healthcare sales rose 7% YoY from multiple hospital project wins.

Full year 2025 cumulative performance: All segments achieved revenue growth. Operating profit increased in Enterprise, Area and Professional segments, while the Consumer segment saw a slight operating profit decline. Group IT solutions overall full-year sales rose 9% YoY, with SI services up 4%, maintenance/operation/outsourcing up 9%, and IT product/system sales up 14%.

• Macroeconomic risks: U.S. trade policy impacts and domestic price increases are expected to act as downside risks to Japan's economic recovery in 2026.
• Market structural risks: Continued secular decline in traditional office printing (paperless trends) and consumer inkjet printer markets, which puts ongoing pressure on related product and consumables sales.
• Supply chain risks: Memory supply constraints create risk of unstable PC supply and demand reduction from price increases for consumer and business IT products.
• IT industry comparison risk: The large spike in PC sales in 2025 driven by the end of Windows 10 extended support creates a difficult year-over-year comparison that drives expected 2026 IT product sales declines in the Area and Consumer segments.

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