CANON Q2 PROFITS DECLINES 86%

[Anonymous]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZrg4I_.7mtw
CANON Q2 PROFITS DECLINES 86%
Economic slump sends Canon’s sales, profit plunging in 1st half
July
09 — Canon Inc., the world’s biggest maker of office equipment, said
second-quarter profit declined 86 percent and cut its annual sales
target, citing “sluggish” demand for printers and copiers.Net income
dropped to 15.6 billion yen ($164 million) from 107.8 billion yen a
year earlier, the Tokyo-based company, also the world’s largest maker
of cameras, said today. That missed the 18 billion yen median of three
analyst estimates compiled by Bloomberg News.

Canon forecast
sales will drop 22 percent this year as the global recession drives
down demand for all its major products. The company said it will
introduce new digital cameras and inkjet printers to help weather the
slowdown.“Demand for office machines and discretionary consumer items
will probably remain weak in the second half of this year,” Yoji
Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong
Kong, said by phone today. “Banks and other companies are cutting costs
and are highly unlikely to buy new equipment.”Canon’s operating profit,
or sales minus the cost of goods sold and administrative expenses,
slumped 72 percent to 44.9 billion yen as revenue dropped 28
percent.The shares slipped 0.3 percent to close at 3,370 yen in Tokyo
trading before the earnings announcement, narrowing their gain this
year to 22 percent. That compares with a 14 percent advance by Japan’s
benchmark Nikkei 225 Stock Average in 2009.

Full-Year Forecasts
Canon
trimmed its sales estimate for the year ending Dec. 31 by 3.9 percent
to 3.2 trillion yen, while maintaining its April forecast for 110
billion yen annual net income. It raised the operating-profit
projection by 5.6 percent to 190 billion yen, citing cost savings.“We
will continue cutting costs to achieve a reduction of 220 billion yen
this fiscal year, which is double our target at the start of the year,”
Masahiro Osawa, senior managing director in charge of Canon’s
accounting, told reporters in Tokyo.

Income at the business
machines division, accounting for 80 percent of overall operating
profit last year, declined 61 percent to 55 billion yen.Profit at the
camera operations, Canon’s second-biggest division, dropped 42 percent
to 38.8 billion yen.“Weak conditions in the end market will probably
continue throughout the fiscal second half in 2009,” Yukihiro Goto, a
Tokyo-based analyst at Macquarie Group Ltd., wrote in a July 22 report.
Usage of cartridges, which can boost Canon’s earnings, probably won’t
increase because corporate users continue to focus on cutting costs,
wrote Goto, who has an “underperform” rating on the stock and estimated
the company’s second-quarter net income at 15.3 billion yen.

[Author]

July 30, 2009 at 11:17 AM