Japan’s Canon 1Q net profit drops slightly

TOKYO (AP) — Canon’s first quarter net profit fell slightly as costs stemming from an acquisition offset higher sales of office equipment and strong demand for digital cameras in developing nations such as India and China.

Canon Inc. cautioned that the year’s performance would likely take a hit from the March 11 earthquake and tsunami in Japan, which damaged the company’s buildings and inventory and caused production holdups due to electricity restrictions and other factors.

The Tokyo-based company said its net profit for the January-March quarter slipped 2.4 percent to 55.5 billion yen ($676 million) from 56.8 billion yen a year earlier.

Costs related to Canon’s March 2010 acquisition of Dutch printer and scanner company Oce NV increased operating expenses by 42 billion yen ($512 million), which took a bite out of profits.

Sales increased 11.1 percent to 839.2 billion yen ($10.2 billion), with the economic recovery in the United States and parts of Europe sustaining demand for laser printers and other office equipment.

Demand was also brisk for point-and-shoot digital cameras in emerging markets such as India and China, the company said.

However, with last month’s disasters dimming the company’s outlook, Canon lowered its forecasts for the full fiscal year through Dec. 31.

“Shortages in the supply capacity for certain products are expected to continue,” it said.

Canon now expects to book a net profit of 220 billion yen ($2.7 billion) on sales of 3.75 trillion yen ($45.7 billion). Back in January it estimated net profit of 310 billion yen and 4.1 trillion yen in sales.

The company’s net profit for 2010 was 246.6 billion yen on 3.7 trillion in sales.

Unlike many Japanese companies, Canon’s fiscal year matches the calendar year. Canon bases its earnings on U.S. accounting standards.

Ahead of its first quarter results, Canon shares declined 0.9 percent to 3,495 yen, close to the Nikkei 225 index’s 1.2 percent fall.

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