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 user 2009-07-30 at 11:16:19 am Views: 58
  • #22651
    Economic slump sends Canon’s sales, profit plunging in 1st half
    July 09 — Canon Inc., the world’s biggest maker of office equipment, said second-quarter profit declined 86 percent and cut its annual sales target, citing “sluggish” demand for printers and copiers.Net income dropped to 15.6 billion yen ($164 million) from 107.8 billion yen a year earlier, the Tokyo-based company, also the world’s largest maker of cameras, said today. That missed the 18 billion yen median of three analyst estimates compiled by Bloomberg News.

    Canon forecast sales will drop 22 percent this year as the global recession drives down demand for all its major products. The company said it will introduce new digital cameras and inkjet printers to help weather the slowdown.“Demand for office machines and discretionary consumer items will probably remain weak in the second half of this year,” Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong, said by phone today. “Banks and other companies are cutting costs and are highly unlikely to buy new equipment.”Canon’s operating profit, or sales minus the cost of goods sold and administrative expenses, slumped 72 percent to 44.9 billion yen as revenue dropped 28 percent.The shares slipped 0.3 percent to close at 3,370 yen in Tokyo trading before the earnings announcement, narrowing their gain this year to 22 percent. That compares with a 14 percent advance by Japan’s benchmark Nikkei 225 Stock Average in 2009.

    Full-Year Forecasts
    Canon trimmed its sales estimate for the year ending Dec. 31 by 3.9 percent to 3.2 trillion yen, while maintaining its April forecast for 110 billion yen annual net income. It raised the operating-profit projection by 5.6 percent to 190 billion yen, citing cost savings.“We will continue cutting costs to achieve a reduction of 220 billion yen this fiscal year, which is double our target at the start of the year,” Masahiro Osawa, senior managing director in charge of Canon’s accounting, told reporters in Tokyo.

    Income at the business machines division, accounting for 80 percent of overall operating profit last year, declined 61 percent to 55 billion yen.Profit at the camera operations, Canon’s second-biggest division, dropped 42 percent to 38.8 billion yen.“Weak conditions in the end market will probably continue throughout the fiscal second half in 2009,” Yukihiro Goto, a Tokyo-based analyst at Macquarie Group Ltd., wrote in a July 22 report. Usage of cartridges, which can boost Canon’s earnings, probably won’t increase because corporate users continue to focus on cutting costs, wrote Goto, who has an “underperform” rating on the stock and estimated the company’s second-quarter net income at 15.3 billion yen.