* Canon cuts full-year op forecast 8.7 pct to 356 bln yen
* Q3 op profit falls 42 pct to 70.9 bln yen, below forecast
* Blames China woes for 1/4 of cut in camera sales forecast
* Revises FX rate to 78 yen/dlr from 80
By Mari Saito
TOKYO, Oct 25 Japan's Canon Inc cut its
full-year earnings outlook and posted a weaker-than-expected
quarterly profit as Chinese consumers began shunning Japanese
products over a territorial spat, adding to corporate Japan's
pain from a slowing global economy.
The camera and printer maker, which generates 80 percent of
its revenue abroad, has been hit particularly hard this year by
sluggish demand in the euro zone and a strong yen.
The Chinese boycotts, blamed along with dull Chinese
economic growth for about one-fourth of a downward revision to
Canon's camera sales forecast for the year, have added to its
woes, although it brushed off a temporary halt to Chinese
production last month due to anti-Japan protests.
"There was no impact from the suspension of production in
China, and we don't expect something like this to happen again,"
Canon Chief Financial Officer Toshizo Tanaka told reporters
after the release of third-quarter results on Thursday.
"But the boycotting of Japanese products is now taking hold
in Chinese society, where people who buy Japanese goods are
"We see this particularly in camera sales and our products
aimed at consumers and we think it will continue for some time."
Canon, as one of the first Japanese technology firms to post
results, is considered an early barometer of corporate earnings
performance in Japan.
And high on Japan Inc's list of worries this earnings season
is what Canon and others are referring to as "China risk".
Almost half of Japanese manufacturers expect to see lower
sales in the current fiscal year due to the spike in tensions
between Asia's two largest economies, while nearly one-quarter
said they were considering delaying or reducing planned
investment in China, according to a Reuters Corporate Survey
released on Wednesday.
Only a few weeks before factory protests and consumer
boycotts erupted in China, the Nikkei business newspaper quoted
a Canon executive as saying the company aimed to quadruple sales
in China to 780 billion yen ($9.77 billion) by 2017.
Canon said it was not thinking about moving production out
of China but cut its compact camera sales forecast for the year
to December to 19 million cameras from 21 million, while the
forecast for interchangeable-lens cameras was cut to 8.8 million
from 9.2 million.
The IXY and PowerShot camera maker, which competes with
Nikon Corp and Sony Corp, has also seen its
compact camera sales eroded by the popularity of smartphones
from the likes of Apple Inc and Samsung Electronics Co
Canon said its operating profit for July-to-September fell
42.2 percent from a year earlier to 70.88 billion yen, short of
the average forecast of 99.9 billion yen in a poll of six
analysts by Thomson Reuters I/B/E/S.
It also cut its operating profit outlook for the full year
to 356 billion yen, down nearly 10 percent from a July forecast
of 390 billion yen.
"I think this is pretty much within the range that people
expected for a downwards revision so I don't get a very negative
feeling about it," said Makoto Kikuchi, CEO of Myojo Asset
Tighter budgets across Europe and elsewhere have undermined
demand for office printers, with Xerox Corp trimming its
full-year earnings forecast this week and saying it would book a
restructuring charge of up to $100 million to account for a
Lexmark International Inc has exited the inkjet
printer business to focus on its more profitable imaging and
Canon, considered a leader in profitability in corporate
Japan with its aggressive cost-cutting, also revised its
forecast average dollar rate for the full year to 78 yen from 80
yen, signalling tougher headwinds from the currency markets,
although it kept its euro rate forecast unchanged at 100 yen.
Shares in Canon ended up 2.2 percent at 2,645 yen ahead of
the results announcement, compared with a 1.1 percent rise in
Tokyo's benchmark Nikkei average.
The stock is down more than 20 percent this year, however,
and has been slow to recover from a three-year low of 2,308 hit
after a disappointing earnings announcement last quarter. The
Nikkei is up 7 percent for the year.