Olympus Rises After Raising Full-Year Net Income Forecast

Olympus Surges After Raising Net Income Forecast
Olympus raised its full-year net income forecast 14 percent. Photographer: Kiyoshi Ota/Bloomberg

Olympus Corp., the camera and endoscope maker that admitted an accounting fraud, rose the most in three months in Tokyo trading after revised earnings forecasts boosted confidence in the stock.

The shares jumped 5.9 percent to 1,317 yen as of the close in Tokyo trading, the biggest gain since July 26, while the benchmark Nikkei 225 Stock Average fell 0.2 percent. Olympus had dropped 11 percent in the previous five trading days.

Olympus raised its full-year net income forecast 14 percent as it sells assets to boost capital while cutting expected operating earnings amid losses at its camera unit. Investors are more comfortable with the new forecasts as the company recovers from a 13-year accounting fraud, said Tomoki Komiya an analyst at Mitsubishi UFJ Morgan Stanley Securities Co.

“The revision is reassuring as the previous forecast for its digital camera business had been unrealistic,” Komiya said by telephone today. “Olympus showed us its attitude towards its restructure and that’s comforting.”

Net income will be 8 billion yen in the 12 months ending March, up from an earlier forecast of 7 billion yen, Olympus said after markets closed yesterday. Operating profit, or sales minus cost of goods sold and administrative expenses, will probably be 38 billion yen compared with the August estimate of 50 billion yen.

Camera Losses

The digital camera unit is expected to report a loss of 8 billion yen in the current fiscal year, compared with its previous forecast of a 1 billion yen profit, as the market for compact models shrinks, the Tokyo-based company said. Full-year sales for its digital cameras will drop by 11 percent to 7.3 million units compared with the previous forecast, Nobuyuki Onishi, head of accounting, said in a briefing in Tokyo yesterday.

The reduction follows Canon Inc. , the world’s largest camera maker, as it also reduced its full-year profit and sales forecasts last month on consumers’ increasing use of smartphones such as Apple Inc. ’s iPhone to take pictures.

“The compact camera market is shrinking rapidly because people are switching to smartphones and the economic situation in Europe became worse,” Chief Executive Officer Hiroyuki Sasa said in the same event yesterday.

Canon lowered its sales forecast for Powershot, Ixus and other compact models by 9.5 percent to 19 million units, and for professional-grade EOS models by 4.3 percent to 8.8 million.

“Imaging still poses a risk,” Kunihiko Kanno, an analyst at BNP Paribas SA, said in a report. The broker reiterated its buy recommendation on Olympus stock.

Olympus has climbed by more than 180 percent in the past year, following a plunge of as much as 81 percent after the board fired President Michael Woodford in October 2011. He had questioned fees paid by the company for takeovers.

Sony Corp. said it would invest 50 billion yen in Olympus, which admitted to a 13-year accounting fraud after the Woodford firing, to shore up its capital ratio as it recovers from the scandal that led to restated earnings and the replacement of directors.

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