CANON SEES 1st PROFIT FALL IN 9 Years

[Anonymous]

http://www.reuters.com/article/marketsNews/idUST31520020081027
Canon cuts forecast, sees 1st profit fall in 9 yrs
* Q3 profit down on firmer yen, slow copier, camera sales
* Cuts 2008 oper profit outlook 25%, sees first fall in 9 yrs
* Profit may fall again in 2009 if yen stays firm
TOKYO,
Oct 08- Japan’s Canon Inc posted a 26 percent drop in quarterly
operating profit and cut its annual outlook, predicting its first fall
in nine years as the global downturn drives up the yen and hurts copier
and camera sales.The yen on Monday traded much firmer against the euro
and the dollar than Canon’s assumptions for October-December, raising
concern that the company may miss its latest 2008 outlook and head into
another year of profit declines next year.Canon’s downward revision,
its second for the year, was widely expected after Sony Corp last week
lowered its annual operating profit forecast by 57 percent, citing a
stronger yen and slower sales of flat TVs and digital cameras.

Canon
is the world’s largest digital camera maker ahead of Sony and Nikon
Corp “The economic slowdown we are facing is something that comes along
once in 50 years or once a century. It is beyond what any one single
company can deal with on its own,” Canon Managing Director Masahiro
Osawa told a group of reporters.”Our basic stance now is we hone our
corporate strength, so we will be running ahead of competition when the
economic recovery comes.”Canon cut its operating profit forecast for
2008 by a quarter to 580 billion yen ($6.18 billion), down from 756.67
billion yen a year earlier and below the market consensus of 693
billion yen from 19 analysts polled by Reuters Estimates.

YEN CLOUDS 2009 OUTLOOK
The
supplier of IXY and EOS brand digital cameras is assuming euro/yen
exchange rate of 135 yen for the last three months this year, and a
dollar/yen rate of 100 yen.

In comparison, the euro traded
around 115 yen and the dollar at about 93 yen on Monday.”With the euro
at 115 yen now, I’m afraid their forecasts do not make much sense any
more,” Mizuho Securities analyst Ryosuke Katsura said.If exchange rates
stay at current levels next year and Canon’s local currency-based sales
are unchanged from 2008, its operating profit would fall by about 40
percent from this year to around 350 billion yen in 2009, Katsura said.

A
firmer yen eats into exporters’ overseas revenue when converted back
into the Japanese currency.Operating profit at Canon, which competes
with Xerox Corp , Ricoh Co Ltd and Konica Minolta Holdings Inc  in
copiers and printers, came to 129.3 billion yen in July-September, down
from 174.22 billion yen a year earlier.Net profit fell 21 percent to 83
billion yen on sales of 985.99 billion yen, down 6.2 percent.Ricoh said
in August it would acquire U.S. office equipment distributor Ikon
Office Solutionsfor $1.62 billion, in a blow to Canon’s operations in
the key U.S. market.

Canon machines represent 60 percent of the
products Ikon handles, but Ricoh said it aimed to replace Canon
products with its own printers and copiers in three to four years.Canon
cut its compact digital camera sales forecast for 2008 by 6 percent to
23.5 million units, boding ill for the earnings performance of
Panasonic Corp , another major digital camera maker set to report
half-year results on Tuesday.

Sony, the maker of Cyber-shot
digital cameras, last week lowered its compact digital camera sales
outlook for the year ending in March 2009 by 8 percent to 24 million
units.Prior to the earnings announcement, shares in Canon closed down
10.9 percent at 2,375 yen, underperforming the Tokyo stock market’s
electrical machinery index , which fell 7.3 percent.Canon shares lost
49 percent from the start of the year to Friday, while the sub-index
fell 56 percent. ($1=93.87 Yen)

[Author]

October 29, 2008 at 11:15 AM