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 user 2008-02-01 at 2:38:00 pm Views: 60
  • #18965

    US slowdown deals blow to Canon
                    (CANON CORP:GREEDY BASTARDS )
    January  2008  Canon on Wednesday blamed problems in the US economy for failing to meet its profit target for the fiscal year and an unexpected shortfall in its quarterly results, the first time that a big Japanese exporter has admitted that the slowdown in the US economy has hit its bottom line.“The subprime loan problems have turned out to be worse than we had anticipated,” said Masahiro Osawa, a managing director at Canon, who added that sales across most divisions had been worse than expected.

    In the current year ending December, Canon expects US sales to decline 0.3 per cent, the first drop in nearly a decade.Canon is the world’s leading digital camera maker and one of Japan’s most profitable companies. Other Japanese groups, such as Toyota and Sony, are still expecting an uptick in sales this year for automobiles and flat-screen televisions in spite of a possible US recession and the weakening dollar.Canon derives nearly 80 per cent of its revenue from overseas markets and the weakening dollar is eating into the value of its exports. It sharply revised its exchange rate expectations, forecasting Y107 to the dollar this year, weakening from 117.5 in 2007. A one-yen change to the dollar will impact sales by Y16.9bn ($158m) this year and cut into operating profit by Y9.9bn.

    The company reported a decline in fourth-quarter operating profit, to Y193.6bn, down 1.2 per cent from a year ago. The figure also fell short of its estimates of Y209.9bn, reflecting a decline in demand in the US market. Its net profit for the 2007 calendar year increased 7.2 per cent to Y488.3bn, but fell short of its own estimates of Y500bn.In the current year, Canon expects to earn Y520bn, falling short of analyst estimates of Y531bn. Sales are expected to increase 5.3 per cent to Y4,720bn, though growth across most divisions is expected to be sluggish.

    Sales of business machines – including copiers – are expected to rise 4 per cent this year to Y3,049bn, compared with 9 per cent growth last year.Other consumer electronics companies have said that the US slowdown has not yet impacted on profits. Sir Howard Stringer, head of Sony, said sales of liquid crystal display televisions had remained resilient. The company is expected to report its highest operating margin ever from its core electronics business when it releases earnings on Thursday.