Canon Inc. (7751), the world’s largest camera maker, plunged the most in more than three years in Tokyo after cutting its full-year profit forecast because of a stronger yen and expectations for weaker global growth.
The shares declined 7.8 percent to close at 2,470 yen, the most since November 2008. The benchmark Nikkei Index gained 0.9 percent. Canon shares have declined 28 percent this year.
Net income may total 250 billion yen ($3.2 billion) in 2012, the Tokyo-based company said yesterday, paring its April projection of 290 billion yen because of expectations for weaker growth in the U.S., Europe and China. Chief Financial Officer Toshizo Tanaka cited a stronger yen and lower sales estimates for compact cameras and laser printers as the main reasons for forecasting a smaller profit.
“Even as the worsening macro economy and a stronger yen were expected to damage Canon’s earnings, an intensifying competition in laser printers was unexpected,” Tetsuya Wadaki, an analyst at Nomura Securities Co., said in a report yesterday. It was also a surprise that sales estimates weren’t improved after a new mirrorless camera model was unveiled on July 23, he said.
Wadaki cut his price target for the stock 8 percent to 3,779 yen. Hisashi Moriyama, an analyst at JPMorgan Chase & Co., reduced his price estimate for the stock 12 percent to 2,200 yen, while Goldman Sachs Group Inc. analyst Toshiya Hari lowered his target price 3 percent to 3,600 yen.
Office Division Decline
The company may need to lower its forecast further, Eiichi Katayama, a Tokyo-based analyst at Bank of America Corp.’s Merrill Lynch said in a report. Laser-printer inventories rose on weak sales at customer Hewlett-Packard Co. (HPQ:US), Yu Yoshida, an analyst at Credit Suisse Group AG, wrote in a report.
Sales at the office-equipment division, Canon’s biggest, may drop 5.2 percent to 1.8 trillion yen this year, the company said yesterday, abandoning an earlier forecast for 1.1 percent growth. Imaging-systems sales may increase 17 percent, compared with the 20 percent it previously forecast.
U.S. printer makers, including Xerox Corp. (XRX:US) and Lexmark International Inc. (LXK:US), lowered earnings forecasts earlier this month, citing weakness in Europe. Worldwide hardcopy peripherals shipments declined 7.4 percent in the first quarter this year, researcher IDC said in May.
The target for compact-camera sales this year was lowered to 21 million units from the 22 million forecast earlier, according to the statement. The company kept the sales target for single-lens reflex cameras, used by professionals, unchanged at 9.2 million units.
The maker of EOS models said earlier this week the company is introducing its first mirrorless model in September, joining Nikon Corp. (7731) in tapping growing demand for lightweight cameras with interchangeable lenses.
The Japanese currency averaged about 102.90 against the euro last quarter, compared with Canon’s estimate in April of 105 yen. A stronger yen cuts the repatriated value of sales earned overseas.
Each 1-yen decline in the value of the dollar will erode second-half operating profit by about 5.3 billion yen, the company said today. The impact of a 1-yen decline by the euro is estimated at 2.9 billion yen, the company said. Canon gets 80 percent of sales outside Japan.
Canon’s revised profit forecast lagged behind the 289.6 billion-yen average estimate of 20 analysts, according to data compiled by Bloomberg. The company also reported second-quarter net income of 51.7 billion yen, also missing analyst estimates of 67.6 billion yen.
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