* Q1 operating profit 82.50 bln yen vs 77.1 bln consensus
* Cuts 2011 op profit forecast to Y335 bln from Y470 bln
* Supply chain recovery to take until June or July - Canon
* Cuts compact camera sales forecast to 20 mln from 23 mln
* Shares fall 0.9 pct before results, Nikkei down 1.2 pct (Adds comment, details, graphic)
By James Topham
TOKYO, April 26 (Reuters) - Japan’s Canon Inc slashed its annual outlook to below market expectations as it tries to deal with a quake-hit supply chain that it said was months away from being fixed.
Canon, which competes with Sony Corp and Nikon Corp in cameras and Xerox Corp and Ricoh Co Ltd in copiers, also reported a 5 percent fall in quarterly operating profit.
The company said a recovery of the supply chain to levels before last month’s earthquake was not expected until June or July.
The world’s largest maker of digital cameras on Tuesday lowered its operating profit forecast for the business year to end-December to 335 billion yen ($4.1 billion), 29 percent lower than its earlier estimate.
That is below the average estimate of 396.5 billion yen in a poll of six analysts taken by Thomson Reuters I/B/E/S after the quake.
“The company’s revised forecast suggests a tough year for the firm,” said Naoki Fujiwara, a fund manager at Tokyo-based Shinkin Asset Management, but added that Canon’s issuance of a forecast was a positive sign with many manufacturers not expected to give any guidance.
“I think (the disaster) will have a temporary impact on supply but we have to wait more to see its impact on demand,” he said.
Canon slashed its sales target for digital compact cameras for this year to 20 million from 23 million, but kept its sales projections for single-lens reflex cameras -- high-end models with interchangeable lenses -- at 7 million.
“Even though we are working on plans to get back in the game in the second half, I think this year will be marked by the harsh conditions that have arisen,” Canon CFO Toshizo Tanaka said at a news briefing.
The disruption of parts supply in Japan has also affected a wide range of electronics makers, including many overseas, such as Apple Inc and Texas Instruments .
Last week, Xerox posted a rise in quarterly profit, but said it sees some “product constraints” in the middle of the second quarter due to the disaster and does not expect a full-product recovery until later this year.
The maker of EOS and IXY digital cameras, like many Japanese manufacturers, had to deal with component supply shortages and rolling blackouts following the massive earthquake and tsunami on March 11 and the subsequent nuclear crisis.
Canon was forced to halt operations at its main camera factory on the southern island of Kyushu in March due to a shortage of parts following the quake, but Tanaka told reporters after the briefing its is now running around 70 percent of capacity.
For January-March, the optical equipment maker’s operating profit came to 82.5 billion yen ($1.0 billion), compared with 86.84 billion yen in the same quarter a year earlier, falling to its lowest level in six quarters.
However, that figure was above the average estimate of 77.1 billion yen in a poll of three analysts taken after the quake.
Ricoh is slated to report earnings on Wednesday, while Sony and Nikon are scheduled to post results next month.
Shares of Canon, which takes its name from the Buddhist goddess of mercy, have fallen 8 percent since the quake versus a decline of about 7 percent in the benchmark Nikkei average .
The company’s shares closed 0.9 percent lower at 3,495 yen on Tuesday before the results announcement, tracking a 1.2 fall in the Nikkei. ($1 = 81.845 Japanese Yen) (Additional reporting by Taiga Uranaka in Tokyo and Ploy Ten Kate in Bangkok; Editing by Vinu Pilakkott)