TOKYO, Oct 30 (Reuters) - Canon Inc (Tokyo:7751.T - News), Japan's largest office machine maker, said on Thursday its quarterly profit jumped 27 percent on strong sales of digital cameras and colour copiers, keeping it on track for a record profit this year.
ADVERTISEMENT
It maintained its full-year net profit forecast, projecting a 38 percent rise to a record 263 billion yen ($2.43 billion) despite the recent surge in the yen against major currencies, which is threatening to put a big dent in its overseas sales.
Canon gets three-fourths of its revenues outside Japan.
"The strengthening yen is a worrisome factor," said Toshizo Tanaka, senior managing director, at a news conference.
"But the third quarter was very strong and the fourth quarter is maintaining that momentum. All of our businesses are keeping pace, with digital cameras leading the way."
Established in 1937 as a camera maker, Canon has benefited from brisk demand for colour copiers, printers and digital cameras, which have been strong thanks to the recent launch of several new models and growing demand both in Japan and overseas.
The Tokyo-based company said group net profit came in at a record 73.01 billion yen in the July-September third quarter on sales of 767.60 billion yen, up 11 percent year-on-year.
The results compared with a profit of 57.5 billion yen in the same period last year and handily beat Canon's forecasts for a net profit of 65 billion yen on sales of 756 billion yen.
A similarly solid performance was reported on Wednesday by fellow copier and printer maker Ricoh Co (Tokyo:7752.T - News), which said its net profit jumped 42 percent in the July-September quarter on the back of healthy sales of multi-function printers and cost cuts.
Analysts were anticipating upbeat results from both Canon and Ricoh, especially after overseas peer Xerox Corp (NYSE:XRX - News) said last week that its quarterly profit more than doubled on brisk sales of colour copiers while printer giant Lexmark International Inc (NYSE:LXK - News) also chimed in with solid quarterly profit growth.
"We've bought lots of Canon stock over the years and we have no intention of selling considering the company's potential for steady growth," said Atsuto Sawakami, fund manager at Sawakami Asset Management. "And if the stock falls sharply on a rise in the yen, we might look to accumulate on dips."
HIGHER PROFITS SEEN NEXT YEAR
Canon said it held 20 to 25 percent of the global market for colour copiers in 2002 and 60 percent of the market for laser beam printers including those it supplies on an original equipment manufacturer (OEM) basis to Hewlett-Packard (NYSE:HPQ - News)
Driven in part by buoyant demand for Canon's "imageRunner C3200" series of network-compatible multifunction digital colour copiers, revenues in the company's business machines segment rose 4.4 percent in the latest quarter year-on-year.
That helped Canon post a 35.4 percent rise in operating profit to 125.56 billion yen in the three months to September, beating the average forecast from six analysts for 108 billion yen and Canon's own estimate of 109 billion yen.
But Canon's Tanaka was equally excited about booming demand for digital cameras, which he said was the main reason Canon lifted its operating profit target for 2003, albeit slightly, by six billion yen to 450 billion yen.
Tanaka told Reuters on the sidelines of the news conference that digital camera sales could grow by about 50 percent in 2004 from a revised target for sales of nine million worldwide in 2003. Canon had previously targeted 8.5 million units this year.
It sold 4.3 million digital cameras in 2002.
And while some analysts have predicted that yen strength would lead to a drop off in profits at Canon next year, Tanaka said that was not likely to be the case.
"I believe we can target higher profits and sales next year," Tanaka said. "I think we have sufficient means to cope even if the dollar stays around 105 yen."
On Thursday the dollar was around 108.06 yen (JPY=), just above three-year lows against the yen.
Canon is banking on more than 100 billion yen in cost cuts during 2003, or 3.5 percent of last year's revenues, to help offset any negative impact from the firming yen."
The company has been trimming costs by moving production to China and other parts of Asia while raising productivity by shifting much of its output from assembly lines to a so-called "cell system" in which workers assemble products at stationary stalls.
Still, Canon continues to suffer from depressed demand for its semiconductor steppers, the complex machinery used to etch circuitry onto chips.
The company cut its projection for calendar 2003 sales of semiconductor steppers to 75 from 83. A Canon spokesman said one of its latest offerings cost about 1.6 billion yen ($14.79 million) per machine.
Shares of Canon have risen 20 percent so far this year, underperforming a 30 percent gain in Japan's electrical machinery index (^IELEC.T - News). Canon ended Thursday up 0.56 percent at 5,430 yen, while the electrical machinery index fell 0.50 percent.
Original Post