Canon warns on weak Europe and Asia sales

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Date: Tuesday November 19, 2013 12:06:02 pm
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    Canon warns on weak Europe and Asia sales
    Canon has cut its full-year profit forecast, warning that sluggish European and Asian economies would hurt its business.
    By Jennifer Thompson in Tokyo

    The Japanese technology company best known for its cameras said that while the US and Japanese economies are recovering, the overall global outlook remains muted due to the fragility of Europe and deceleration in emerging economies.

    This is despite Canon having mitigated the challenge posed by the photo-taking smartphone by its focus on high-end, interchangeable lens digital cameras, including DSLR models, which trump their new rivals in picture quality.

    Overseas demand “is expected to face challenges” in the crucial pre-Christmas shopping season, Canon said. Just over half of group sales come from the Asia-Pacific and Europe.

    While it still expected revenue in 2013 to surpass that of 2012, it cut its sales forecast for this year by Y100bn to Y3.75tn. Net income is expected to be Y20bn less than previously assumed, at Y240bn.

    “In particular, the outlook for the year-end shopping season remains uncertain for business segments targeting individual consumers, which are susceptible to the effects of business conditions,” the company said.

    Its basic camera models, notably the point-and-shoot digital compact camera, remain vulnerable to competition from smartphones. Demand for its inkjet printers is also expected to decline, mainly in Asia.

    But for now, the strategy of focusing on top-quality camera models appears to be working as sales of advanced models, aimed at amateurs as well as professionals, continued to grow in the three months to September.

    “Focusing on high-end interchangeable lens cameras differentiates it from smartphone makers,” said Tetsuya Wadaki, analyst at Nomura.

    It has also diversified into areas beyond hardware sales, with a growing emphasis on subscription and printing-related advisory services for large companies.

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