Fujifilm, Ricoh Q3 profits beat expectations

TOKYO, Jan 30 (Reuters) Fujifilm Holdings Corp posted a surprise 70 percent jump in quarterly profit and raised its annual forecast to above the market consensus on Tuesday, citing benefits from rigorous cost cuts, a weaker yen and steady sales of films used in flat panels and colour copiers.

Rival Ricoh Co. Ltd. also reported a stronger-than-expected 34 percent rise in quarterly profit and announced a new chief executive.

Faced with a rapid shift to digital cameras, Fujifilm has cut thousands of jobs and squeezed production of photographic film, while investing in new areas such as materials used in liquid crystal displays (LCDs) and health care.

Operating profit was 70.7 billion yen (1 million) in the three months to Dec. 31, up from 41.7 billion yen a year earlier.

That compares with the mean estimate of 28.7 billion yen based on forecasts from three analysts surveyed by Reuters Estimates.

The Tokyo-based company raised its operating profit forecast to 110 billion yen for the year ending March 31, up 38 percent from an earlier target of 80 billion yen and exceeding the mean market expectation of 97 billion yen for this year.

Fujifilm said contributions from cost cuts to earnings will total about 40 billion yen this business year, exceeding its initial expectations by about 10 billion yen.

Fujifilm and other Japanese precision equipment makers earn the bulk of their earnings abroad and have benefitted from a weaker yen, especially against the euro, which has boosted their overseas sales.

RICOH CEO Separately, Ricoh said operating profit rose to 48.6 billion yen in the third quarter ended Dec. 31 from 36.3 billion yen a year ago, exceeding the mean market estimate of 41.5 billion yen.

It also nudged up its profit forecast for the year ending March 31 to 172 billion yen from 170 billion yen.

''We raised our outlook slightly on the weaker yen and good results up to the fiscal third quarter, but our forecast for fourth quarter (ending in March) is conservative given that competition intensifies at the end of the fiscal year,'' Zenji Miura, Ricoh's chief financial officer, told a news conference.

Ricoh, like Canon Inc. and Fujifilm, is enjoying higher returns from an industry shift to colour office equipment, which is more profitable than monochrome because it uses up more paper and toner.

Fujifilm said operating profit at its document solutions unit, which includes office equipment, surged 82 percent to 21.2 billion yen in the recent quarter. Fujifilm owns 75 percent of Fuji Xerox, while U.S.-based Xerox Corp. owns the remainder.

Ricoh also said on Tuesday that Chief Executive Masamitsu Sakurai, 65, would step down and become chairman on April 1. He will be succeeded by 57-year-old Shiro Kondo, who is currently in charge of the company's multifunction device business.

Ricoh said last week it would pay 5 million to buy IBM's digital commercial printer business.

Earlier this week, Canon, the world's No. 1 copier maker, said its operating profit rose 15.7 percent to 195.9 billion yen in the quarter ended Dec. 31, matching market consensus.

UNCLEAR OUTLOOK Fujifilm said sales rose 5.1 percent to 716.5 billion yen in the fiscal third quarter, and it also slightly raised its annual revenue forecast to 2.75 trillion yen from an earlier estimate of 2.74 trillion yen. Last year's sales totalled 2.67 trillion yen.

''With regard to next year, the outlooks for currency fluctuation and raw material prices are still unclear,'' Nobuhira Takagi, a Fujifilm executive in charge of finances, said at an analyst meeting in Tokyo.

Prices of silver and aluminium, key raw materials for Fujifilm's products, have surged the past year.

Takagi said demand for the company's films used in LCD panels has remained strong in recent months, shaking off concerns for a slowdown in orders as panel makers hold back investments and put pressure on pricing amid intense competition.

Fujifilm is the leading maker of a type of film used in LCD panels and the No. 2 player in the lucrative market for medical endoscopes behind industry leader Olympus Corp.

Shares in Fujifilm jumped 13.5 percent in the latest quarter, outperforming a 4.5 percent gain in Japan's precision machinery index IPRCS.

Prior to the announcement, Fujifilm's stock closed 2.1 percent higher at 4,790 yen. The sector index gained 0.76 percent. Ricoh rose 1 percent to 2,525 yen.

REUTERS PV GC1728