TOKYO — Canon expects a 26.6 percent increase in operating profit this year as it cuts costs and increases revenue — but the projection Wednesday still fell short of analysts’ expectations.
Canon, a camera and printer maker considered a leader in profitability in corporate Japan with its aggressive cost-cutting, is angling for a foothold in the growing market for mirrorless cameras with interchangeable lenses, where it faces stiff competition from Sony, Olympus and Nikon.
Canon’s operating profit for the three months that ended Dec. 31 fell 17.9 percent, to ¥77.7 billion, or $853 million, below the average estimate of ¥100.9 billion among seven analysts surveyed by Thomson Reuters I/B/E/S.
“Both its full-year earnings and forecast are below market consensus, so the results were seen as negative,” said Makoto Kikuchi, the chief executive of Myojo Asset Management. “Investors have bought Canon on overly high expectations that a weaker yen will lift its bottom line, but such excitement should recede.”
Demand for compact cameras is shrinking as consumers shift to smartphones, while stretched budgets among customers in Europe have eroded sales of Canon’s office printers. And the company, which derives 80 percent of its revenue from overseas, was badly hit by the firmness of the Japanese currency last year. Canon officials said Wednesday that economic recovery in India and China, as well as aggressive economic stimulus policies in Japan, were likely to support the company’s earnings.
The company set its exchange rate assumptions for the business year ending in December at ¥85 to the dollar and ¥115 to the euro, weaker than the average last year of ¥79.96 per dollar and ¥102.8 per euro.
As one of the first blue-chip Japanese companies to report quarterly results, Canon is often seen as a barometer for technology sector earnings.
The company forecast a full-year operating profit of ¥410 billion for the current year through December, compared with the average expectation of a ¥443.3 billion profit among 21 analysts, according to Thomson Reuters StarMine.
Canon’s shares have fallen about 1 percent since the start of last year, underperforming the Nikkei average’s gain of 31 percent. The shares slipped to a three-year low in July, when Canon cut its outlook on fears of shrinking demand in China.
The stock ended nearly 3 percent higher Wednesday before the earnings announcement.
Xerox, with which Canon competes for a share of the global printer market, overshot expectations with its quarterly earnings and maintained its full-year targets as it restructures parts of its business and commits to further cost cuts.
Nikon is due to report its results next Wednesday, with Sony following the next day.
Article source: http://www.nytimes.com/2013/01/31/technology/canon-forecast-falls-short-of-expectations.html?partner=rss&emc=rss
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