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 user 2007-01-30 at 10:26:00 am Views: 46
  • #17254

    Canon Slowest Net Income Growth Since 1999
    07 — Canon Inc., Japan’s most profitable electronics and office
    equipment maker, forecast its slowest earnings growth in eight years as
    competition erodes margins in copier machines and digital cameras.Net
    income is projected to gain 8.7 percent to a record 495 billion yen ($4
    billion) this year, the smallest increase since 1999, Tokyo-based Canon
    said. The company today reported fourth- quarter profit rose 16 percent
    to 125.6 billion yen.Canon is making single-lens reflex cameras that
    can use interchangeable lenses and copier machines that can print, scan
    and fax to sustain profit margins. Sony Corp. and Matsush*ta Electric
    Industrial Co. last year entered the digital SLR market with cheaper
    models. International Business Machines Corp. last week exited the
    commercial printing business because of increased competition from
    Xerox Corp. and Canon.“It’s not surprising that growth is becoming
    less impressive as the scale gets bigger,” said Hideyuki Ookoshi, who
    oversees $365 million at Chiba-Gin Asset Management Co. in Tokyo. “The
    earnings results may also differ from forecasts significantly depending
    on currency fluctuations.”The company based its 2007 forecasts on 115
    yen to the dollar, and 150 yen to the euro. The Japanese currency last
    year traded at an average 116.34 against the dollar and at 146.18
    against the euro.Canon’s total sales are expected to gain 7.1 percent
    to 4.45 trillion yen this year. Operating profit will rise 8.2 percent
    to 765 billion yen, from 707.0 billion yen in 2006, when foreign
    exchange gains added 78 billion yen, the company said today.Profit
    margins for office equipment this year are expected to fall to 22.1
    percent, from 22.3 percent in 2006, Canon said. Margins at its camera
    business will be maintained at 25.8 percent, the company said.

    Yen Forecasts
    said today that 2007 operating profit will be affected by 9 billion yen
    for every one-yen change against the dollar, and by 5.6 billion yen for
    every yen change against the euro.The company raised its capital
    spending target this year to 480 billion yen from 379.7 billion yen a
    year ago. Investment in research and development will rise to 345
    billion yen from 308.3 billion yen last year.In the fourth quarter,
    profit climbed to 125.6 billion yen on sales of copiers and single-lens
    reflex digital cameras and a weakening yen. Sales rose 8.7 percent to
    1.22 trillion yen. Operating profit, or sales minus the cost of goods
    sold and administrative expenses, gained 16 percent to 195.9 billion
    yen in the quarter from a year earlier.Shares of Canon closed unchanged
    at 6,500 yen in Tokyo. The earnings were announced after the market
    shut. The stock has gained 18 percent in the past six months, compared
    with a 13 percent advance in the Nikkei 225 Stock Average.

    Camera Shipments
    of cameras in the fourth quarter rose 17 percent to 346.4 billion yen
    from a year earlier, beating the company’s October forecast of 338
    billion yen. Operating profit in the unit gained 47 percent to 92.6
    billion yen, compared with a year earlier and an earlier forecast of 80
    billion yen.Digital camera shipments will gain 7.1 percent to 24
    million units in 2007, of which single-lens reflex models will account
    for 3 million, Canon said. The company cited strong demand for digital
    SLR cameras, including the EOS Digital Rebel XTi.Single-lens reflex
    cameras have become the most profitable part of the digital camera
    market, as price competition drive margins lower for compact
    models.Canon expects full-year operating profit in the camera business
    to rise 7.1 percent to 287.8 billion yen as sales gain 7.1 percent to
    1.12 trillion yen. Sales of digital cameras, compact and single lens
    reflex, will account for 24 percent of total revenue.The company
    released the EOS Kiss Digital X Model in the third quarter to hold off
    competition from Sony and Matsush*ta Electric, which released their
    first DSLR models in July.

    Office Equipment
    Sales of office
    machines, including copiers and printers, rose 8.2 percent to 765
    billion yen in the quarter, beating the October forecast of 750 billion
    yen in October, Canon said. Operating profit in the unit gained 10
    percent to 165.6 billion yen from a year ago, compared with a forecast
    of 159 billion yen.Canon expects operating profit in the business to
    rise 6.8 percent to 640 billion yen this year as sales gain 7.8 percent
    to 2.90 trillion yen.Multifunction inkjet printer prices will probably
    fall 20 percent by March 2007, Canon said in October. Canon in August
    said it will overtake Xerox Corp. this year as the world’s largest
    maker of color copiers that also print, scan and fax.

    SED TVs
    of optical equipment, such as machines that etch patterns on chips and
    flat panels, fell 2 percent to 157.2 billion yen in the quarter.
    Operating profit in the unit dropped 54 percent to 3.9 billion yen from
    a year ago, compared with an earlier forecast for 10 billion
    yen.Toshizo Tanaka, a managing director at Canon, told reporters in
    Tokyo today that the company still plans to sell surface- conduction
    electron-emitter displays, or SED, televisions in Japan in the fourth
    quarter this year, although it’s assessing plans for the commercial
    production of the panels.The surface-conduction electron-emitter
    display technology produces clearer images and consumes less power than
    plasma and liquid-crystal displays.Separately, Canon said today it will
    apply to delist its shares from the Frankfurt Stock Exchange next month
    because of low volume. The process is expected to be completed in June,
    the company said. Canon stock will continue to trade in Tokyo, Osaka,
    Nagoya, Sapporo and Fukuoka in Japan and on the New York Stock

    Japan’s Canon 2006 net profit hits record on digicam, printer sales -

    - Canon Inc made a record-breaking net profit for last year, amid the
    popularity of its digital cameras and printers, the company said.The
    company posted a net profit of 455.32 bln yen for last year, against
    384.1 bln yen for 2005.Its operating profit rose 21.3 pct to a record
    707.03 bln yen as revenue increased 10.7 pct to a record 4.16 trln
    yen.In October, the maker of digital cameras and office equipment had
    projected net profit of 440 bln yen, pretax profit of 700 bln yen and
    operating profit of 691 bln yen on revenue of 4.14 trln yen.Canon
    senior managing director Toshizo Tanaka told a press conference: ‘Sales
    and all profits registered the seventh straight year of rises, hitting
    records, driven by strong demand for our digital cameras, laser
    printers and color copiers.’Canon sold 21.1 mln digital cameras last
    year, 25 pct more than in 2005. It sold 18.6 mln compact digital
    cameras, about 3.6 mln more than in 2005, and 2.5 mln single lens
    reflex (SLR) digital cameras, about 600,000 more than in 2005.’As
    global demand for digital cameras grew in almost all regions, we
    released 18 new models, which helped us to achieve sales of over 1 trln
    yen in the camera division alone for the first time ever,’ Tanaka
    said.’By continuing to release attractive models, we are aiming for a
    higher market share,’ he said.Canon aims to sell 24 mln digital cameras
    this year, comprising 21 mln compact digital cameras and 3 mln SLR
    digital cameras.’A weak yen also served as a key growth driver, while
    strenuous cost-cutting and the greater use of automation lent
    additional support,’ Tanaka said.Canon said the weak yen had added 78
    bln yen to its operating profit and cost reduction had added 119 bln
    yen.The operating profit of its camera division surged by 55 pct to
    268.7 bln yen, and that of tits office equipment division rose by 10.6
    pct to 599.2 bln yen.The company forecasts another record-breaking year
    this year, projecting net profit of 495 bln yen and operating profit of
    765 bln yen on revenue of 4.45 trln yen.’The pace of growth is expected
    to moderate somewhat in the current year, as we expect the yen to firm
    somewhat against the US dollar because of narrowing interest rate
    differentials,’ Tanaka said.Canon forecasts that the dollar will
    average 115 yen this year, having averaged 116.43 yen last year. The
    company said that every single yen by which the Japanese currency
    appreciated against the dollar could reduce its annual operating profit
    by some 9 bln yen.(1 usd = 121.77 yen)