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CANON LIFTS FY05 PROFIT TARGET
Canon Inc. said Wednesday it has raised its group pretax profit target for fiscal 2005 by over Y70 billion, thanks to improving profitability from its focus on high- margin products and cost cuts in Manufacturing.
The Japanese precision equipment maker now aims for a group pretax profit of more than Y470 billion in fiscal 2005, up from Y400 billion in the previous midterm target it made in early 2001. The higher profit target is no surprise as Canon is forecasting a group pretax profit of Y440 billion for this fiscal year ending Dec. 31 – already well above its original profit target for 2005.
“Our profit margin has been growing” thanks to the company’s focus on such high-margin products as high- performance digital cameras and digital copiers, a Canon spokesman said.
Canon’s group-based ratio of operating profit to sales came to 14.1% in the six months ended June 30, up from 10.1% a year earlier. On the other hand, the company will now aim for group revenue of Y3.7 trillion to Y3.8 trillion in 2005, down from its prior goal of Y4 trillion. The downgrade reflects the rise in the yen against the dollar as well as intensifying market competition, the spokesman said.
It expects to post group revenue of Y3.18 trillion this year, up 8.2% from last year. The company also expects its group net profit to jump 38% to Y263 billion this year, which would be a record high for the fourth year in a row.
Canon is benefiting from a recovery in sales of laser-beam printers under an original equipment manufacturing deal with its partner Hewlett-Packard Co. (HWP) and surging sales of digital cameras, as well as production-cost cuts. A rebound in sales of semiconductor production equipment is also helping its bottom line.
The company is due to report its earnings for the July-September quarter on Oct. 30.
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