Canon Cuts Full-Year Forecast for Profit Gain to Drop (Update2)
By Hiroshi Suzuki
Oct. 27 (Bloomberg) -- Canon Inc., the world's largest camera maker, cut its forecast for full-year profit growth to the first decline in nine years as the surging yen undermined overseas sales.
Net income will probably fall 23 percent from a year earlier to 375 billion yen ($4 billion), less than the 500 billion yen forecast in July, the Tokyo-based company said today. Sales are expected to drop 5.2 percent to 4.25 trillion yen, missing the earlier projected 4.59 trillion yen.
Canon reduced its forecasts for camera and copier sales after the yen soared 43 percent against the euro and 20 percent versus the dollar this year. The company, led by Chief Executive Officer Fujio Mitarai, 73, gets about 80 percent of sales from overseas and forecast lower earnings as the credit crisis forces customers to hold back spending.
``Forecast cuts are something we just have to accept,'' said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo. ``There weren't any companies that had forecast this kind of market turmoil.''
The yen, the best performer this year among 16 major currencies tracked by Bloomberg, was recently at 115.7 to the euro and 92.9 to the dollar. Canon forecast the U.S. currency will average 100 yen and the euro 135 yen in the fourth quarter.
``The pace of the yen's advance was way beyond our expectation,'' said Masahiro Osawa, Canon's senior managing director in charge of accounting. ``Our revised forecast for the yen's exchange rates are still weaker than current levels, so if the yen's advance continues at this pace, our earnings will be hit further.''
Shares Drop
Canon fell 11 percent to close at 2,375 yen on the Tokyo Stock Exchange before the company reported earnings. The stock has dropped 54 percent this year after losing 22 percent in 2007.
Operating profit, or sales minus the cost of goods sold and administrative expenses, is projected to drop 23 percent to 580 billion yen this year. Canon earlier predicted 770 billion yen.
The company, also Japan's largest business-equipment maker, said its sales of office gear such as copiers and printers will probably reach 1.16 trillion yen this year, missing the 1.29 trillion yen forecast in July.
Xerox Corp., the world's largest maker of high-speed color printers, said last month it's experiencing a slowdown in North America, Canon's second-biggest market. The Norwalk, Connecticut- based company said Oct. 23 it plans to cut 3,000 jobs and speed cost cuts to cope with the ``unpredictable economy.''
Slower Camera Sales
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