CANON SLOWEST NET INCOME SINCE 1999

[Anonymous]

Canon Slowest Net Income Growth Since 1999
Jan
07 — Canon Inc., Japan’s most profitable electronics and office
equipment maker, forecast its slowest earnings growth in eight years as
competition erodes margins in copier machines and digital cameras.Net
income is projected to gain 8.7 percent to a record 495 billion yen ($4
billion) this year, the smallest increase since 1999, Tokyo-based Canon
said. The company today reported fourth- quarter profit rose 16 percent
to 125.6 billion yen.Canon is making single-lens reflex cameras that
can use interchangeable lenses and copier machines that can print, scan
and fax to sustain profit margins. Sony Corp. and Matsush*ta Electric
Industrial Co. last year entered the digital SLR market with cheaper
models. International Business Machines Corp. last week exited the
commercial printing business because of increased competition from
Xerox Corp. and Canon.“It’s not surprising that growth is becoming
less impressive as the scale gets bigger,” said Hideyuki Ookoshi, who
oversees $365 million at Chiba-Gin Asset Management Co. in Tokyo. “The
earnings results may also differ from forecasts significantly depending
on currency fluctuations.”The company based its 2007 forecasts on 115
yen to the dollar, and 150 yen to the euro. The Japanese currency last
year traded at an average 116.34 against the dollar and at 146.18
against the euro.Canon’s total sales are expected to gain 7.1 percent
to 4.45 trillion yen this year. Operating profit will rise 8.2 percent
to 765 billion yen, from 707.0 billion yen in 2006, when foreign
exchange gains added 78 billion yen, the company said today.Profit
margins for office equipment this year are expected to fall to 22.1
percent, from 22.3 percent in 2006, Canon said. Margins at its camera
business will be maintained at 25.8 percent, the company said.

Yen Forecasts
Canon
said today that 2007 operating profit will be affected by 9 billion yen
for every one-yen change against the dollar, and by 5.6 billion yen for
every yen change against the euro.The company raised its capital
spending target this year to 480 billion yen from 379.7 billion yen a
year ago. Investment in research and development will rise to 345
billion yen from 308.3 billion yen last year.In the fourth quarter,
profit climbed to 125.6 billion yen on sales of copiers and single-lens
reflex digital cameras and a weakening yen. Sales rose 8.7 percent to
1.22 trillion yen. Operating profit, or sales minus the cost of goods
sold and administrative expenses, gained 16 percent to 195.9 billion
yen in the quarter from a year earlier.Shares of Canon closed unchanged
at 6,500 yen in Tokyo. The earnings were announced after the market
shut. The stock has gained 18 percent in the past six months, compared
with a 13 percent advance in the Nikkei 225 Stock Average.

Camera Shipments
Sales
of cameras in the fourth quarter rose 17 percent to 346.4 billion yen
from a year earlier, beating the company’s October forecast of 338
billion yen. Operating profit in the unit gained 47 percent to 92.6
billion yen, compared with a year earlier and an earlier forecast of 80
billion yen.Digital camera shipments will gain 7.1 percent to 24
million units in 2007, of which single-lens reflex models will account
for 3 million, Canon said. The company cited strong demand for digital
SLR cameras, including the EOS Digital Rebel XTi.Single-lens reflex
cameras have become the most profitable part of the digital camera
market, as price competition drive margins lower for compact
models.Canon expects full-year operating profit in the camera business
to rise 7.1 percent to 287.8 billion yen as sales gain 7.1 percent to
1.12 trillion yen. Sales of digital cameras, compact and single lens
reflex, will account for 24 percent of total revenue.The company
released the EOS Kiss Digital X Model in the third quarter to hold off
competition from Sony and Matsush*ta Electric, which released their
first DSLR models in July.

Office Equipment
Sales of office
machines, including copiers and printers, rose 8.2 percent to 765
billion yen in the quarter, beating the October forecast of 750 billion
yen in October, Canon said. Operating profit in the unit gained 10
percent to 165.6 billion yen from a year ago, compared with a forecast
of 159 billion yen.Canon expects operating profit in the business to
rise 6.8 percent to 640 billion yen this year as sales gain 7.8 percent
to 2.90 trillion yen.Multifunction inkjet printer prices will probably
fall 20 percent by March 2007, Canon said in October. Canon in August
said it will overtake Xerox Corp. this year as the world’s largest
maker of color copiers that also print, scan and fax.

SED TVs
Sales
of optical equipment, such as machines that etch patterns on chips and
flat panels, fell 2 percent to 157.2 billion yen in the quarter.
Operating profit in the unit dropped 54 percent to 3.9 billion yen from
a year ago, compared with an earlier forecast for 10 billion
yen.Toshizo Tanaka, a managing director at Canon, told reporters in
Tokyo today that the company still plans to sell surface- conduction
electron-emitter displays, or SED, televisions in Japan in the fourth
quarter this year, although it’s assessing plans for the commercial
production of the panels.The surface-conduction electron-emitter
display technology produces clearer images and consumes less power than
plasma and liquid-crystal displays.Separately, Canon said today it will
apply to delist its shares from the Frankfurt Stock Exchange next month
because of low volume. The process is expected to be completed in June,
the company said. Canon stock will continue to trade in Tokyo, Osaka,
Nagoya, Sapporo and Fukuoka in Japan and on the New York Stock
Exchange.

Japan’s Canon 2006 net profit hits record on digicam, printer sales –
TOKYO
– Canon Inc made a record-breaking net profit for last year, amid the
popularity of its digital cameras and printers, the company said.The
company posted a net profit of 455.32 bln yen for last year, against
384.1 bln yen for 2005.Its operating profit rose 21.3 pct to a record
707.03 bln yen as revenue increased 10.7 pct to a record 4.16 trln
yen.In October, the maker of digital cameras and office equipment had
projected net profit of 440 bln yen, pretax profit of 700 bln yen and
operating profit of 691 bln yen on revenue of 4.14 trln yen.Canon
senior managing director Toshizo Tanaka told a press conference: ‘Sales
and all profits registered the seventh straight year of rises, hitting
records, driven by strong demand for our digital cameras, laser
printers and color copiers.’Canon sold 21.1 mln digital cameras last
year, 25 pct more than in 2005. It sold 18.6 mln compact digital
cameras, about 3.6 mln more than in 2005, and 2.5 mln single lens
reflex (SLR) digital cameras, about 600,000 more than in 2005.’As
global demand for digital cameras grew in almost all regions, we
released 18 new models, which helped us to achieve sales of over 1 trln
yen in the camera division alone for the first time ever,’ Tanaka
said.’By continuing to release attractive models, we are aiming for a
higher market share,’ he said.Canon aims to sell 24 mln digital cameras
this year, comprising 21 mln compact digital cameras and 3 mln SLR
digital cameras.’A weak yen also served as a key growth driver, while
strenuous cost-cutting and the greater use of automation lent
additional support,’ Tanaka said.Canon said the weak yen had added 78
bln yen to its operating profit and cost reduction had added 119 bln
yen.The operating profit of its camera division surged by 55 pct to
268.7 bln yen, and that of tits office equipment division rose by 10.6
pct to 599.2 bln yen.The company forecasts another record-breaking year
this year, projecting net profit of 495 bln yen and operating profit of
765 bln yen on revenue of 4.45 trln yen.’The pace of growth is expected
to moderate somewhat in the current year, as we expect the yen to firm
somewhat against the US dollar because of narrowing interest rate
differentials,’ Tanaka said.Canon forecasts that the dollar will
average 115 yen this year, having averaged 116.43 yen last year. The
company said that every single yen by which the Japanese currency
appreciated against the dollar could reduce its annual operating profit
by some 9 bln yen.(1 usd = 121.77 yen)

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January 30, 2007 at 10:26 AM