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Canon CFO: Euro Zone’s "Structural Problem" Will Take Years To Solve
Canon CFO Tanaka predicts the euro zone’s "structural problem" will take years to solve,He also says he doesn’t expect a drastic decline in the euro below Y100
TOKYO –As Japan’s major exporters struggle to absorb the impact of the strong yen on their earnings, Canon Inc.’s finance chief said Tuesday that any substantial recovery in the euro against the yen is unlikely, as the euro zone’s "structural problem" may take several years to solve."Unfortunately we can’t hope for any quick recovery in the euro," Chief Financial Officer Toshizo Tanaka said in an interview with Dow Jones Newswires.Canon, a bellwether for Japan’s exporters, generates about 80% of its revenue overseas. A strong yen hurts Japanese exporters because it cuts into revenue earned abroad when repatriated into yen, often forcing them to slash costs in order to stay profitable.
Europe accounted for 33% of Canon’s group revenue in the fiscal first half ended June, while the Americas took up 27% and Japan 19%.
For 2011, Canon forecasts a 5.4% rise in net profit to Y260 billion, a 1.9% decline in operating profit to Y380 billion and a 2% rise in revenue to Y3.78 trillion.
Canon’s forecasts for the second half are based on the assumption that the dollar will average Y80 and the euro Y115.
On Tuesday, the dollar was trading around Y76.70, while the euro Y104.60.
Tanaka said that he doesn’t expect a drastic decline in the euro below Y100, as "there are no positive reasons to keep buying the yen," but also acknowledged that recent movements in the foreign exchange market seem to be "out of control," but also acknowledged that sudden movements can cause foreign exchange markets to go "out of control."
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