Canon sees another record profit, taps new president
Mon Jan 30, 2006 4:03 AM ET
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By Nathan Layne
TOKYO (Reuters) - Canon Inc. (7751.T: Quote, Profile, Research) said on Monday that strong sales of digital cameras and printers would help it score a seventh straight year of record profit in 2006, and it tapped a new president to replace the outgoing Fujio Mitarai.
Canon said Tsuneji Uchida, 64, the head of its digital camera operations, would take over the reins from Mitarai, who has been widely expected to step down because he will be taking the top job at Japan's most powerful business lobby in May.
Mitarai, 70, who cleaned up the company's finances and boosted profits seven-fold since becoming chief executive in 1995, will stay on as chairman.
"Uchida has been instrumental in bolstering our digital camera business through strong leadership," Canon Senior Managing Director Toshizo Tanaka told a news conference. "Within the company he was seen as a natural choice."
The world's top maker of digital cameras and laser printers forecast group net profit to rise 8.0 percent to 415 billion yen ($3.54 billion) in 2006, beating the consensus of 401 billion yen, according to a Reuters Estimates poll of 17 analysts.
The Tokyo-based company is banking on higher sales of color copiers, laser printers supplied to Hewlett-Packard Co. (HPQ.N: Quote, Profile, Research), and digital cameras, especially high-end and high-margin digital single lens reflex (SLR) models that use interchangeable lenses.
Canon sees sales up 8.1 percent at 4.06 trillion yen.
For the fourth quarter ended in December, group net profit came to 108.21 billion yen, up from 80.8 billion yen a year earlier but below the market consensus for a profit of 113.8 billion yen.
Canon's operating profit in the quarter hit a record high of 169.3 billion yen, but this also fell a bit short of analysts' expectations and the company's own target even though earnings were boosted by a softer yen.
Tanaka attributed the shortfall to weaker-than-expected sales of color office copiers and ink jet printers amid intense competition with rivals such as Ricoh Co. (7752.T: Quote, Profile, Research), Lexmark International Inc. (LXK.N: Quote, Profile, Research) and Seiko Epson Corp. (6724.T: Quote, Profile, Research)
"Our competitors cut prices more than we had originally anticipated," Tanaka said.
Last week, U.S.-based copier maker Xerox (XRX.N: Quote, Profile, Research) posted a higher quarterly profit but disappointed investors with a drop in revenue while Lexmark saw its profit tumble by nearly half and Seiko Epson cut its full-year outlook to a net loss.
Ricoh also unveiled quarterly earnings on Monday, reporting a 4 percent drop in operating income due to higher research and development expenses. Ricoh's sales rose 7 percent, however, and net profit increased 3.5 percent to 23 billion yen.
Shares in Canon rose about 13 percent in the October-December quarter, underperforming Tokyo's electrical machinery index (.IELEC.T: Quote, Profile, Research), which gained about 18 percent. Before the announcement, Canon shares ended up 0.4 percent at 7,190 yen.
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