Quake hits Canon in 1H, but outlook brighter

Japanese high-tech giant Canon said Monday first-half net profit fell on the impact of the March disasters as the yen strengthened, but raised its forecasts amid a faster-than-expected recovery. The maker of PowerShot digital cameras and office equipment said it had made steady progress in restoring production after the earthquake and tsunami and its ability to limit the impact of the tragedy was "better than expected." It also cited a continued demand recovery in overseas markets, with the laser printer market in particular boosted by emerging economies. January-June net profit slipped 12.2 percent to 109.3 billion yen ($1.4 billion) from a year earlier while operating profit slipped 19.7 percent to 160.9 billion yen. Sales slipped 2.9 percent to 1.68 trillion yen. The April-June quarter alone saw net profit tumble 20.4 percent to 53.9 billion yen as post-quake production disruption took hold. Despite the impact of the twin tragedy and the uncertainties associated with a strong yen, Canon upped its annual net profit forecast in anticipation of "a second-half boost in sales supported by the swift recovery of production". It now forecasts net profit to rise 5.4 percent this year to 260 billion yen compared with 246.6 billion yen a year ago. Operating profit is set to fall 1.9 percent to 380 billion yen. In April the company warned that its outlook was "extremely uncertain" after the March 11 quake and tsunami damaged inventory assets and caused a shortage of parts, forcing it to halt factory lines. "Despite the direct impact the earthquake had on Canon, including damage to buildings and production facilities, along with the significant effects of decreased production triggered by supply shortages of components, Canon swiftly launched recovery and restoration measures," the company said Monday. The rise of the yen, which in March hit a postwar high of 76.25 yen to the dollar and is currently trading at the 78 yen level, would result in an 83.8 billion yen hit to annual sales and 51.3 billion yen hit to annual operating profit.