CANON SEES 1st PROFIT FALL IN 9 Years
CANON SEES 1st PROFIT FALL IN 9 Years
2008-10-29 at 11:15:07 am #20532
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)