Office equipment sales lift Canon profit target for 2014

Strong sales of office equipment in the first quarter of the year helped boost Canon’s 2014 operating profit target, while a reshuffle of its camera line-up also helped boost margins, the company said..

The Japanese firm said sales of office copiers and printers rose by 9.7 per cent in the first quarter, helping lift operating profits by 51 per cent to a higher-than-expected 82.6 billion yen.

But saturation in the high-end single-lens-reflex camera market took its toll on the firm, with camera sales down by 22 per cent year-on-year in the quarter. The impact of high-quality smartphone cameras was also felt in the sector.

Chief financial officer Toshizo Tanaka told an earnings briefing that sales of pricier compact cameras had actually increased after Canon adjusted its camera production and line-up in the first quarter to meet customers' demand for more sophisticated products.

But he said a recovery would take time.

"Determining whether we can achieve the growth we are hoping for will take some time," Mr Tanaka said. "Things are getting better in China and Europe, but it will take a while to see whether that will continue."

Canon forecast sales for digital cameras with interchangeable lens to reach 7.6 million units this year, a slight drop from 2013 when the models were first introduced.

“After watching carefully how things go in each market through the second quarter we will re-evaluate our forecasts for the second half, our busiest period,” Mr Tanaka added.

Canon said in its quarterly earnings statement it expects an operating profit of 365 billion yen for the year to December 31st, a slight increase from its previous forecast of 360 billion yen. The forecast profit would be 8.2 percent higher than the previous year.

With four-fifths of its sales overseas, Canon is a major beneficiary of the yen’s weakening over the past year. It said the slide in the yen, triggered by Prime Minister Shinzo Abe’s reflationary policies, had added 56.5 billion yen to its revenue in the first quarter.

Canon expected the weaker yen to add 91.8 billion yen to its full-year sales, Tanaka said. He expected annual operating profit to increase by 16.9 billion yen, if the yen remains, on average, at 100 versus the dollar and 135 against the euro.

Canon’s share price closed flat ahead of the results, outperforming a 1 percent drop in the Nikkei benchmark index . (Reuters)