Canon Projects Profit Will Rise 52%

[Plex]

Biggest Increase in Decade

Jan. 27 (Bloomberg) -- Canon Inc. forecast its biggest annual profit increase in a decade as the global economic recovery revives demand for cameras and office equipment.

Net income at the world’s largest camera maker will probably rise 52 percent to 200 billion yen ($2.24 billion) in the 12 months ending Dec. 31, the Tokyo-based company said in a statement today, in line with the 200 billion yen median of 20 analyst estimates compiled by Bloomberg.

Canon predicted camera and printer sales will rise for the first time in three years, helped by demand in China, and said profit growth will be boosted after cutting costs by 232 billion yen last year. The company is bidding to acquire printer maker Oce NV to expand its lead over Ricoh Co. in Europe.

“Demand for office equipment, especially printers, will likely rebound as economies improve globally,” said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “We all know the company’s camera business is doing great, thanks to its strong brand and tactful marketing: I’m positive about the company’s long-term prospects.” He declined to say whether he holds Canon stock.

Sales are expected to rise 7.5 percent to 3.45 trillion yen this year, Canon said. Operating profit, or sales minus the cost of goods sold and administrative expenses, will increase 52 percent to 330 billion yen.

Sales Recovery

Canon, which gained 41 percent last year, fell 2.8 percent to close at 3,615 yen in Tokyo trading before the announcement. Japan’s benchmark Nikkei 225 Stock Average lost 0.7 percent.

Revenue from cameras at Japanese makers rose 1.1 percent in November, the first gain in 14 months, according to Camera & Imaging Products Association. Worldwide shipments of printers rose 12 percent in the three months ended Sept. 30 from the previous quarter, according to researcher IDC.

Sales at the office-equipment division, which accounted for 51 percent of 2009 revenue, are projected to rise 7 percent to 1.76 trillion yen this year, Canon said.

Camera sales will probably rise 6 percent to 25.7 million units this year, Canon said, boosting revenue at the consumer business 5.3 percent to 1.37 trillion yen. Consumer products accounted for 41 percent of 2009 revenue.

China will continue to boost Canon’s earnings both in office equipments and camera, Masahiro Osawa, a senior managing director in charge of Canon’s accounting, told reporters in Tokyo. Revenue from Asia including China accounts for about 19 percent of Canon’s overall sales, he said.

Beats 2009 Estimates

For the year ended Dec. 31, Canon posted net income of 131.6 billion yen, more than the 117 billion yen median of 20 analyst estimates. Revenue fell 22 percent to 3.21 trillion yen in the year as operating profit declined 56 percent to 217.1 billion yen, the company said. Canon cut expenses by 232 billion yen in the year just ended according to the statement.

Canon, which generated 78 percent of sales outside Japan last year, forecast the dollar will average 90 yen and the euro 130 yen this year. That compares with 93.21 yen and 130.46 yen respectively for 2009, the company said.

Canon has no plan to raise the purchase price for Oce, Osawa said.

Price Is Right

“We believe our price is adequate.” Canon has acquired about 20 percent of Oce so far, Osawa said.

In November, Canon said it agreed to buy Venlo, Netherlands-based Oce for about 730 million euros ($1.03 billion) to expand its printer operations. Canon is aiming to acquire at least 85 percent of the company and will start the tender offering by March 2010, the two companies said Nov. 16.

The agreement is opposed by investors including Hermes Fund Managers Ltd. and Orbis Funds, which said they won’t tender their shares. The two investors have a combined 13.3 percent stake of Oce, according to their statements.

Bloomberg