Canon President Will Step Down as Annual Profit Forecast Misses Estimates

Canon Inc. (7751) said its president will step down after the world’s largest camera maker forecast profit will increase by less than 1 percent for a second straight year.

President and Chief Operating Officer Tsuneji Uchida, 70, will leave both posts effective March 29 and be replaced by Chairman Fujio Mitarai, 76, the Tokyo-based company said in a statement. Uchida, who will become an adviser, offered to resign, Chief Financial Officer Toshizo Tanaka told reporters today.

Net income this year probably will increase to 250 billion yen ($3.3 billion) from 248.6 billion yen last year, the company said in a statement today, lagging behind the 304 billion-yen average of 20 analysts’ estimates compiled by Bloomberg. The maker of PowerShot digital cameras, copiers and chipmaking equipment is boosting output overseas as gains in the yen make it more expensive to manufacture in Japan.

“The announcement was unexpected,” said Masayuki Ohtani, a strategist at Securities Japan Inc. in Tokyo. “While Canon suffered from external obstacles such as the earthquake, floods and the yen’s gain, business results weren’t anything so regrettable.”

The company fell 1 percent to 3,435 yen in Tokyo trading today, before the earnings announcement. The shares dropped 19 percent last year, compared with a 4 percent increase for Nikon Corp. (7731)

Currency Gains

Uchida joined Canon in 1965, becoming the head of camera operations and head of the lens business before being named president in 2006. He cut costs and led acquisitions of companies including Oce NV, a Dutch printer maker.

Sales are expected to rise 5.4 percent to 3.75 trillion yen this year, Canon said. Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably increase 3.2 percent to 390 billion yen.

“The future remains increasingly uncertain amid Europe’s debt crisis,” Tanaka said. “It’s not easy to bring someone new as president right away, given the tough environment.”

Canon, which makes more than half of its sales overseas, based this year’s estimate on the yen averaging 75 versus the dollar and 100 against the euro, appreciations of 5 yen and 11 yen, respectively. The company is investing 15 billion yen in a new office-systems venture in Thailand.

Camera Shipments

The Japanese currency’s gain of 8.9 percent against the euro and 5.5 percent versus the dollar last year reduced the value of earnings repatriated from overseas.

The company wants to sell 22 million units of compact cameras this year, a gain of 17 percent, according to the statement. Sales of digital single-lens reflex cameras, with interchangeable lenses, may rise 27 percent to 9.2 million units.

Global shipments of digital cameras fell 35 percent in unit terms in November from a year earlier, according to the Camera & Imaging Products Association. The shipments declined 4.3 percent for the 11 months to Nov. 30 from a year earlier.

Production setbacks because of last year’s floods in Thailand may linger until February, Tanaka said.

Canon today reported fourth-quarter net income of 61.4 billion yen, compared with 54 billion yen a year earlier. Profit in the year ended in December increased 0.8 percent to 248.6 billion yen.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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