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Canon Raises Profit Forecast, Cites Economic Recovery

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Oct. 27 (Bloomberg) -- Canon Inc., the world’s largest camera maker, raised its full-year profit forecast 2.1 percent citing cost cuts and higher camera shipments.

The company expects to report a net income of 245 billion yen ($3 billion) this year compared with an April forecast of 240 billion yen, Canon said in a statement in Tokyo today. The company also raised its operating profit forecast while slashing its prediction for sales this year.

Canon raised its annual forecast for camera sales as developed economies recover and China leads growth in emerging markets. Stronger sales, cost cuts and other efforts to improve profitability may help the company overcome the effects of a stronger yen, which is trading near a 15-year high, said Toshizo Tanaka, Canon’s executive vice president.

“Investors have started to pay more attention to whether Canon can sustain growth in the coming year under the pressure of the strong yen,” said Hisashi Moriyama, a Tokyo-based analyst at JPMorgan Chase & Co, who rates the stock “neutral.” He spoke before the earnings were announced.

The maker of the PowerShot camera models, scanners and copiers fell 2.3 percent to 3,620 yen before the earnings were announced. The shares have declined 7.4 percent this year.

Canon also reported net income jumped 86 percent in the third quarter to 68.2 billion yen. That beat the 58.5 billion yen average of five analyst estimates compiled by Bloomberg.

Camera Sales

The company expects camera sales this year to be 26.7 million units compared with a July projection of 26.5 million units.

Operating profit, or sales minus the cost of goods sold and administrative expenses, may be 390 billion yen this year against a previous forecast for 360 billion yen, Canon said. Sales may be 3.71 trillion yen compared with a previous forecast for 3.75 trillion yen, the company said.

Income at the office-equipment division, Canon’s biggest last year, rose 30 percent to 76.3 billion yen in the quarter as revenue gained 26 percent to 505 billion yen.

Profit at the consumer division including cameras increased 14 percent to 58.8 billion yen while revenue gained 3.2 percent to 324 billion yen.

Canon, which generated 78 percent of sales outside Japan last year, today forecast the dollar will average 80 yen and the euro 115 yen in the last quarter. That compares with 90 yen and 110 yen respectively estimated in July.

The world’s second-largest printer maker loses about 4.7 billion yen of six-month operating profit for every 1 yen decline in the value of the dollar and 2.7 billion yen of income for each 1 yen decline by the euro, the company said in July.

The yen gained 17 percent against the euro and 11 percent against the dollar in the first nine months of 2010, the best performer among 17 major currencies tracked by Bloomberg.

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

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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