Wednesday January 28, 09:44 AM
Japan's Canon sees two-thirds profit drop in 2009
By Hiroshi Hiyama
TOKYO (AFP) - Japanese high-tech giant Canon Inc (Berlin: CNN1.BE - news) . warned Wednesday the economic crisis would drive down profits by two-thirds in 2009, after a 91 percent plunge in the fourth quarter of last year.
Unlike some rivals Canon, which is often hailed as a success story in Japan's recovery from the 1990s recession, expects to avoid falling into loss thanks to the popularity of its high-end digital cameras.
But it has not escaped the fallout from the financial crisis, which has reduced consumer spending and pushed up the yen, eroding export earnings.
Canon logged a net profit of 11.62 billion yen (130 million dollars) in the fourth quarter of 2008, well short of the previous year's 127.85 billion. Operating profit fell 81 percent to 35.83 billion yen.
The camera market is seeing increasingly tough competition, said Canon managing director Masahiro Osawa.
"The rapid deterioration in the economic environment since the autumn has triggered a global slump in individual consumption. This has caused damage to the digital camera market beyond our expectation," he told reporters.
Canon, which also makes office equipment, said net profit fell 37 percent in 2008 to 309.15 billion yen. Operating profit dropped 34 percent to 496.07 billion yen as revenue declined 8.6 percent to 4.09 trillion yen.
For 2009 Canon expects a much lower net profit of 98 billion yen, operating profit of 160 billion yen and revenue of 3.5 trillion yen.
The company, which relies on overseas markets for 80 percent of its sales, does not expect market conditions to improve this year.
As consumers grow more cautious due to recessions in major economies, price competition is becoming more intense.
Canon said digital camera prices fell roughly 20 percent in 2008 and are expected to slide 10 to 15 percent in 2009.
"Since November, we are left with the impression that markets in the industrialised countries and emerging nations, like Russia, have slowed down and ground to a halt," Osawa said.
He said the company was reviewing its operations to strip out costs.
The strength of the Japanese currency against the dollar and the euro is expected to depress revenue by at least 40 billion yen this year, Osawa said.
Other Japanese electronics makers are also struggling, prompting a wave of layoffs among temporary workers.
Sony Corp (Munich: SON1.MU - news) . warned last week it expects its biggest-ever operating loss of 2.9 billion dollars for the current financial year to March while Sanyo Electric Co (Berlin: SAE1.BE - news) . has forecast zero earnings.
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