TOKYO, Oct 25 (Reuters) Japan's Canon Inc posted an 8.9 percent drop in quarterly net profit on Thursday, hit by the yen's appreciation, but kept its full-year outlook on the back of strong demand for its digital cameras.
Brisk sales of printers and copiers also helped keep Canon, the world's largest maker of digital cameras ahead of Sony Corp, Eastman Kodak Co and Olympus Corp, on track for its eighth straight year of earnings growth.
Canon, which makes EOS digital single-lens reflex (SLR) cameras and IXY compact digital cameras, controls nearly half of the global digital SLR camera market, the most lucrative segment of the digital camera industry. SLR cameras are high-end models with interchangeable lenses.
Backed by brisk demand, Canon lifted its SLR shipment target for the year to December to 3.2 million units from its previous projection of 3 million units.
''The momentum is keeping up,'' Canon Managing Director Masahiro Osawa told a news conference. ''It is certain that we can finish this year, which is our company's 70th anniversary, by posting an eighth straight year of profit and sales growth.'' Canon's net profit for the July-September quarter was 105.3 billion yen, down 8.9 percent from a year ago and lower than the market consensus of 117.5 billion yen, according to a poll of three analysts by Reuters Estimates.
The company kept its full-year net profit forecast of 500 billion yen, a record profit, and upgraded its operating profit forecast by about 1 percent thanks to aggressive cost cuts.
It now expects a group operating profit of 773 billion yen for the year to December, against its previous projection of 766 billion yen. The new forecast is also in line with the market consensus of 778 billion yen.
YEN WORRY But investor attention is focused on the impact of the yen on Canon's earnings, which makes three-quarters of its sales outside Japan.
If the yen appreciates against the dollar by one yen, that would dent Canon's sales by 4.7 billion yen. Canon slightly lowered its full-year sales target to 4.56 trillion yen from 4.58 trillion yen.
''The fact that we are seeing an impact of the yen on Canon's earnings is a concern,'' said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. Ltd. ''Canon's results won't encourage investors to buy more Canon shares, but they won't push down the price that much either.'' Canon has generated about 60 percent of overall sales in the United States and Europe this year, which Yamashita said may not be positive amid concerns of a slowdown in the U.S. economy.
''Investors think profit growth at companies with exposure to emerging markets like Asia will likely be bigger than those that rely on North American or European markets,'' he said.
The yen's volatile moves have affected Canon shares in the past few months. The stock fell 13.3 percent in the July-September quarter, underperforming the electronics sector IELEC.which dropped 9.4 percent. Prior to the announcement on Thursday, it closed down 2.6 percent at 5,580 yen.
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