Canon cuts year's forecast on high yen, Thai floods

Posted at 10/25/11 4:21 PM

TOKYO - Japanese high-tech giant Canon said Tuesday it had lowered its annual forecast as it grapples with a historically high yen, a slowing global economy and the impact of heavy flooding in Thailand.

But strong sales of office equipment and digital cameras to emerging markets such as China and India helped it post a 14.2% rise in third quarter net profit, despite the yen's record strength in the period.

Canon now expects net income in the year ending December to be 230 billion yen ($2.98 million), down from an earlier forecast of 260 billion yen and a decrease of 6.7% from the previous year's level.

Its lower forecasts come after the yen has hit postwar highs against the dollar and 10-year highs versus the euro in recent months, eroding repatriated earnings of Japan's exporters at a time of slowing global demand.

Canon has revised its calculations on the basis of one dollar to 77 yen and 105 yen to one euro for the fourth quarter, levels below those previously considered, resulting in lower sales in foreign currencies.

As the firm recovers from the impact of the March 11 earthquake and tsunami on production, Thailand's worst flooding in decades has hampered its operations there, including the output of inkjet printers, which it has temporarily shifted to other plants including in Vietnam.

Canon now expects annual sales of 3.65 trillion yen, 1.5% less than last year, and an operating profit of 360 billion, down 7.1% from last year.

For the three months ended September, net income was 77.8 billion yen, 14.2 percent higher than the 68.2 billion yen a year earlier.

Operating profit for the quarter grew 17.4% to 122.55 billion yen from 104.42 billion yen a year earlier. Sales gained 0.4% to 916.91 billion yen from 913.15 billion yen.

But for nine months to September, the company reported net profit of 187.19 billion yen, 2.8% less than a year earlier.

Shares in Canon closed down 1.82% at 3,490 yen ahead of the announcement.