Canon cuts profit forecast on first annual drop in high-end camera sales
TOKYO (Reuters) - Japan's Canon Corp cut its operating profit outlook for the second quarter in a row, below analysts' estimates, warning that sales of its signature high-end cameras will fall this year for the first time since their launch in 2003.
The world's largest camera maker said it now sees global economic gloom squeezing sales of its digital interchangeable-lens cameras to 8 million through December from 8.2 million last year. Demand from camera buffs will stay weak in Europe, and fail to recover as quickly in China as Canon had expected.
While the company's point-and-shoot digital camera sales have been hit in recent years as consumers increasingly use smartphones to take casual shots, the high-margin interchangeable-lens format favored by professional photographers and enthusiasts has seen growth every year up to 2012, company officials said.
Despite a rebound in operating profit for July-September from a weak quarter a year earlier, Canon lowered its full-year operating profit forecast to 360 billion yen ($3.70 billion). That compares with an average of 378.5 billion yen based on 23 analysts' estimates according to Thomson Reuters Starmine.
"Until recently, interchangeable-lens sales' growth was close to double figures even when the economy was bad. But now people are postponing consumption of luxury items such as cameras," Chief Financial Officer Toshizo Tanaka said during a briefing in Tokyo, adding that consumers had become more sensitive to price.
In July, predicting a pickup in China in the second half of the year, the company forecast operating profit would be 380 billion yen, compared with 324 billion yen for 2012. Tanaka said protracted gloom in Europe was half of the reason for the downward revision.
Canon said it now sees sales of the digital interchangeable-lens format coming in 11 percent below its previous forecast of 9 million cameras, issued in July.
Makoto Kikuchi, chief executive of Myojo Asset Management in Tokyo, said, "The slump in interchangeable-lens cameras is not due to a structural problem such as market saturation, but solely because of the worsening of the macroeconomic environment."
"For October-December, emerging economies such as China, India and Brazil may weaken further," Kikuchi said.
One of the first of Japan's technology companies to report results for July-September, Canon made 90.6 billion yen in operating profit in the July-September quarter, up 28 percent from last year, when anti-Japanese sentiment in China stirred by a territorial dispute depressed sales of a range of Japanese goods.
Japanese rival Nikon Corp reports earnings on November 7.
Canon's compact camera sales have long been hit by the boom in demand for smartphones that take photos. But the company left its 2013 sales forecast for compact cameras unchanged at 14 million, against 18.3 million in 2012.
Stock in the company, which also makes products like office printers, chip making equipment and medical devices, has fallen 6.3 percent this year.
That compares with a nearly 40 percent rise in the Nikkei index, driven by growth expectations surrounding Prime Minister Shinzo Abe's policy drive to reinvigorate the Japanese economy.
($1 = 97.2900 Japanese yen)
(Reporting by Sophie Knight; Editing by Kenneth Maxwell)