TOKYO
MAI 09 – Japan’s Canon Inc raised its annual outlook as it cuts costs
and benefits from a weakening yen, after a slump in demand for copiers
and printers knocked its quarterly profit down by 88 percent.Demand for
office machines and supplies such as toner cartridges remained weak as
a global financial crisis means businesses keep hold of their copiers
and printers for longer and use them less heavily.

Fujifilm
Holdings , a rival in digital cameras and office equipment which has
been hit much harder by the downturn, forecast a 90 billion yen ($923
million) annual operating loss as it scraps equipment and cuts 5,000
jobs.

Canon, which also competes against Xerox Corp  and Ricoh
Co Ltd, earlier this month delayed building a toner cartridge parts
plant in western Japan for a second time, underscoring weak demand.But
Canon’s overseas sales have been boosted by a softer-than-expected yen.
The company also said it would aim to cut 172 billion yen in costs this
year, 60 billion yen more than originally planned.Canon raised its 2009
operating profit forecast by 12.5 percent to 180 billion yen, though
that is still down 64 percent on the year. It trimmed its sales
forecast by 5 percent to 3.33 trillion yen.Mizuho Securities analyst
Ryosuke Katsura said the operating profit forecast change was
effectively a downward revision after stripping out currency effects,
but the results show Canon is holding up relatively well.”Some had
expected losses for Canon’s first quarter, so I think it’s positive it
managed to post profits,” he said. “Its cost-cutting efforts should be
given some credit, but I have yet to see how the company achieves
growth.”

TOUGH YEAR AHEAD
Canon itself is bracing for another tough year.
“It
will probably be a while before the economy stages a convincing
recovery, and the yen is likely to stay much higher than a year ago,”
said Managing Director Masahiro Osawa. “We will continue operating in a
tough business environment.”Canon did not offer an annual dividend
forecast.

Rival Xerox last week forecast a weaker-than-expected
quarterly profit and cut its annual outlook nearly in half, while Ricoh
predicted a 13 percent fall in operating profit for the year to next
March.

Ricoh last October bought major U.S. office equipment
distributor Ikon Office Solutions for $1.6 billion, delivering a heavy
blow to Canon, whose machines had represented 60 percent of the
products Ikon had handled, but which have rapidly been replaced with
Ricoh equipment.Operating profit at Canon, the world’s largest digital
camera maker ahead of Sony Corp and Nikon Corp , dropped to 20.03
billion yen ($205 million) in January-March, from 170.83 billion yen a
year earlier.Sales fell 32 percent to 687 billion yen.

Fujifilm
said it would book restructuring charges of 145 billion yen in the year
to March 2010 as it sheds jobs and streamlines operations, resulting in
an estimated operating loss of 90 billion yen this financial year, a
reversal from a 37.3 billion yen profit a year earlier.