By Kiyoshi Takenaka
TOKYO, April 24 (Reuters) - Japanese camera and office equipment maker Canon Inc (7751.T: Quote, Profile, Research) posted an 18 percent fall in quarterly operating profit on Thursday, hit by a firmer yen, and cut its full-year outlook.
The lowered forecast is still above market expectations and the company said it is on track for a ninth year of profit growth. In contrast, rival Ricoh Co Ltd (7752.T: Quote, Profile, Research) forecast a 1 percent dip in operating profit for the current business year.
Although Canon saw healthy demand for its IXY and EOS brand digital cameras, the yen's appreciation hurt its overall profitability. The company earns more than three-quarters of its group revenues overseas, but the value of those earnings falls when converted back into a stronger Japanese currency.
Sluggish copier demand in the United States also hit Canon, which competes with Xerox Corp (XRX.N: Quote, Profile, Research), Konica Minolta Holdings Inc (4902.T: Quote, Profile, Research) and Ricoh in printers and copiers.
Canon cut its operating profit forecast by 4 percent to 770 billion yen ($7.44 billion) for the year to December, compared with a consensus of a 753.57 billion yen profit in a poll of 18 analysts by Reuters Estimates.
"I think the impact on the firm's share price will be relatively limited since the stock has already fallen to a discounted level," said Shigemi Nonaka, special adviser to Polestar Investment Management Co.
The latest forecast exceeds a 756.67 billion yen profit in 2007, when the Tokyo-based company posted its eighth straight year of profit growth.
"The economy is expected to stage a gradual recovery towards the end of the year and demand from emerging markets is likely to remain strong," Canon Managing Director Masahiro Osawa told a news conference.
"I think we can overcome harder-than-usual business conditions and achieve sales and profit growth for the ninth year."
SUBPRIME CHILL
Canon is the world's No.1 digital camera maker ahead of Sony Corp (6758.T: Quote, Profile, Research), Olympus Corp (7733.T: Quote, Profile, Research) and Nikon Corp (7731.T: Quote, Profile, Research). The company stood by its target in January of boosting its digital camera sales by 20 percent to 29.4 million units in 2008.
In January-March, Canon's operating profit was 170.83 billion yen, down from a 207.4 billion yen profit a year earlier and roughly in line with analysts' consensus of a 171.1 billion yen profit.
Net profit fell 18.7 percent from a year earlier to 106.64 billion yen on sales of 1.0075 trillion yen, down 3.1 percent.
Ricoh also posted a slide in quarterly profit on Thursday.
Its operating profit fell 10 percent from a year earlier to 47.4 billion yen in January-March due to the yen's appreciation against the dollar and slower multifunctional printer sales in the United States.
Multifunctional printers typically offer printer, copier, facsimile and scanner functions, and are mainly used in offices.
"Due to subprime-related problems, we saw customers, particularly major customers in the financial and construction industries, reining in spending," Ricoh Chief Financial Officer Zenji Miura told reporters.
For the year ending March 2009, it expects operating profit to slide 1 percent to 180 billion yen, falling short of a market consensus of 190.4 billion yen.
Canon's business year ends in December, while Ricoh, like most other Japanese companies, closes its book in March.
Prior to the announcement, shares in Canon closed up 0.6 percent at 5,170 yen and Ricoh rose 0.2 percent to 1,743 yen. Both outperformed the Nikkei average .N225, which lost 0.3 percent. (Additional reporting by Taiga Uranaka, Nathan layne) (Editing by Lincoln Feast/Elaine Hardcastle)
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