CANON Q1 PROFIT DOWN 18%

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Canon Q1 profit down 18 pct
APR2008TOKYO: Japanese camera and office equipment maker Canon Inc posted an 18 per cent fall in quarterly operating profit on Thursday, hit by a firmer yen, and lowered its full-year outlook closer to market expectations.Although Canon saw healthy demand for its digital cameras, the yen’s appreciation hurt its overall profitability. The company earns more than three-quarters of its group revenues overseas, but the value of those earnings falls when converted back into a stronger Japanese currency.

Sluggish copier demand in the United States also hit Canon, which competes with Xerox Corp, Ricoh Co Ltd and Konica Minolta Holdings Inc in printers and copiers. Canon cut its operating profit forecast by 4 per cent to 770 billion yen ($7.44 billion) for the year to December, compared with a consensus of a 753.57 billion yen profit in a poll of 18 analysts.”I think the impact on the firm’s share price will be relatively limited since the stock has already fallen to a discounted level,” said Shigemi Nonaka, special adviser to Polestar Investment Management Co. The lowered forecast still tops a 756.67 billion yen profit in 2007, when the Tokyo-based company posted its eighth straight year of profit growth.”The economy is expected to stage a gradual recovery towards the end of the year and demand from emerging markets is likely to remain strong,” Canon Managing Director Masahiro Osawa said. “I think we can overcome harder-than-usual business conditions and achieve sales and profit growth for the ninth year.”Canon, which offers IXY compact digital cameras and EOS high-end models, is the world’s largest digital camera maker ahead of Sony Corp, Olympus Corp and Nikon Corp. In January-March, Canon’s operating profit was 170.83 billion yen, down from a 207.4 billion yen profit a year earlier and roughly in line with analysts’ consensus of a 171.1 billion yen profit.Net profit fell 18.7 per cent from a year earlier to 106.64 billion yen on sales of 1.0075 trillion yen, down 3.1 per cent. Rival Ricoh also posted a slide in quarterly profit on Thursday. Its operating profit fell 10 per cent from a year earlier to 47.4 billion yen in January-March, due to the yen’s appreciation against the dollar and slower multifunctional printer sales in the United States.Multifunctional printers typically offer printer, copier, facsimile and scanner functions. For the year ending March 2009, it expects operating profit to dip 1 per cent to 180 billion yen, falling short of a market consensus of 190.4 billion yen.

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April 25, 2008 at 3:41 PM