Canon Inc. (7751), the world’s largest camera maker, was the worst performer in the Nikkei 225 Stock Average after forecasting earnings below analyst estimates amid slumping demand for compact models.
The stock fell as much as 5.7 percent, the biggest decline since July 26, before trading 5.1 percent lower at 3,645 yen as of 9:21 a.m in Tokyo. Net income will probably be 290 billion yen ($2.9 billion) in 2013, the Tokyo-based company said in a statement yesterday, missing the 308 billion-yen average of 20 analyst estimates compiled by Bloomberg.
The maker of office printers, cameras and lenses cut its full-year sales target for compact cameras by 15 percent to 14.5 million units as consumers increasingly use smartphones to snap shots. Canon raised its net income projection as the yen’s weakening to the lowest in about four years boosted the value of overseas sales, which were about 79 percent of the 2012 total.
“Earnings are weak in all businesses, with cameras particularly so,” Toshiya Hari, an analyst at Goldman Sachs Group Inc. in Tokyo, said in a report yesterday, cutting his share price forecast for the stock 9 percent to 3,630 yen.
For the quarter ended March 31, Canon reported a 34 percent decline in net income to 40.9 billion yen, citing falling prices and slowing economies in China and Europe. That also missed the average analyst estimate of 51.9 billion yen. Sales in the quarter fell 1.5 percent to 816.7 billion yen, the company said.
Operating margin dropped to about 6.7 percent in the first three months of the year, the lowest since 2009, according to data compiled by Bloomberg.
“We’ll probably struggle to grow our businesses in the first half of this year,” Toshizo Tanaka, Canon’s chief financial officer, told reporters in Tokyo yesterday. Demand for office printers and digital cameras has been sluggish, he said.
Global shipments of digital cameras almost halved to 4.26 million units in February from a year earlier, a 10th consecutive monthly decline, according to the Camera & Imaging Products Association in Tokyo. Shipments of compact models were down 40 percent in the first two months of 2013 from a year earlier, while that for cameras with interchangeable lenses dropped 17 percent, according to the industry group.
“We think Canon’s first quarter results could prompt concern over companies that are majorly involved in the compact digital camera business,” Masahiro Shibano, an analyst at Citigroup Inc., said in a report.
Nikon Corp. (7731) fell 2.3 percent to 2,197 yen.
Canon revised its exchange rate forecast to 95 yen to the dollar for the last three quarters of 2013, and to 125 yen for the euro, the statement showed. That compares with 85 yen to the dollar and 115 yen to the euro predicted three months ago.
The Japanese currency averaged 92.17 yen against the dollar in the first quarter, compared with 79.32 yen a year earlier, according to data compiled by Bloomberg.
Each 1-yen change in the value of the dollar would boost or damp full-year operating profit by about 7.7 billion yen, Canon said in January.
Sales may rise to 3.98 trillion yen this year, compared with an earlier projection of 3.81 trillion yen. Operating profit, or sales minus the cost of goods sold and administrative expenses, may total 450 billion yen, the company said, raising its earlier forecast by 9.8 percent.
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