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 user 2008-02-01 at 2:41:00 pm Views: 45
  • #19243

    US slowdown deals blow to Canon
    2008  Canon on Wednesday blamed problems in the US economy for failing
    to meet its profit target for the fiscal year and an unexpected
    shortfall in its quarterly results, the first time that a big Japanese
    exporter has admitted that the slowdown in the US economy has hit its
    bottom line.“The subprime loan problems have turned out to be worse
    than we had anticipated,” said Masahiro Osawa, a managing director at
    Canon, who added that sales across most divisions had been worse than

    In the current year ending December, Canon expects US
    sales to decline 0.3 per cent, the first drop in nearly a decade.Canon
    is the world’s leading digital camera maker and one of Japan’s most
    profitable companies. Other Japanese groups, such as Toyota and Sony,
    are still expecting an uptick in sales this year for automobiles and
    flat-screen televisions in spite of a possible US recession and the
    weakening dollar.Canon derives nearly 80 per cent of its revenue from
    overseas markets and the weakening dollar is eating into the value of
    its exports. It sharply revised its exchange rate expectations,
    forecasting Y107 to the dollar this year, weakening from 117.5 in 2007.
    A one-yen change to the dollar will impact sales by Y16.9bn ($158m)
    this year and cut into operating profit by Y9.9bn.

    The company
    reported a decline in fourth-quarter operating profit, to Y193.6bn,
    down 1.2 per cent from a year ago. The figure also fell short of its
    estimates of Y209.9bn, reflecting a decline in demand in the US market.
    Its net profit for the 2007 calendar year increased 7.2 per cent to
    Y488.3bn, but fell short of its own estimates of Y500bn.In the current
    year, Canon expects to earn Y520bn, falling short of analyst estimates
    of Y531bn. Sales are expected to increase 5.3 per cent to Y4,720bn,
    though growth across most divisions is expected to be sluggish.

    of business machines – including copiers – are expected to rise 4 per
    cent this year to Y3,049bn, compared with 9 per cent growth last
    year.Other consumer electronics companies have said that the US
    slowdown has not yet impacted on profits. Sir Howard Stringer, head of
    Sony, said sales of liquid crystal display televisions had remained
    resilient. The company is expected to report its highest operating
    margin ever from its core electronics business when it releases
    earnings on Thursday.