Canon, the world's largest camera maker, lowered its full-year sales forecast as demand slows amid a consumer shift to smartphones for taking pictures.

Sales are projected to be 3.78 trillion yen (€27.4 billion) for the current fiscal year, a 2.1 per cent cut from the previous forecast.

The Tokyo-based company maintained earlier projections for operating profit of 365 billion yen and net income of 240 billion yen.

Smartphones packed with advanced sensors and lenses are winning customers and cutting demand for cheaper compact cameras.

Canon, which posted better-than-expected quarterly profit, is counting on sales of office equipment, including a partnership with Hewlett-Packard, as it automates more production to reduce costs and revive earnings.

“Demand for compact cameras declined sharply because of smartphones,” Makoto Kikuchi, chief executive officer at Myojo Asset Management in Tokyo, said by phone.

“Canon was too aggressive with their SLR sales forecast. People who want them have already bought them.”

Canon rose 0.8 per cent to 3,414 yen at the close in Tokyo trading, before the earnings announcement.

The stock has added 2.5 per cent this year after three straight annual declines.

Operating profit was 110.5 billion yen. “The forecast cut is a reflection of slower than expected economic recovery,” chief financial officer Toshizo Tanaka said today.

“An increase in sales of high-end color copiers and printers has pushed up profitability.”

Canon sold 2.3 million compact cameras in the second quarter, a 36 per cent decrease from a year earlier, according to Tanaka.

Sales of the company’s single-lens reflex cameras dropped to 1.7 million from 2.1 million.

Industrywide digital camera shipments declined about 35 per cent from a year earlier in the first five months of 2014, according to the Camera and Imaging Products Association.

Bloomberg