Tokyo: Japanese camera and office equipment maker Canon Inc. recorded a slump in operating profits for a third straight quarter, hit by a US economic slowdown and a stronger yen.
First-half operating profits fell for the first time in six years as soaring raw material costs piled on additional pressure.
The lacklustre results reflect increasingly tough conditions facing Japan’s technology giants, many of which have seen record-breaking profit streaks come to an end as the global economy sours.
Net earnings tumbled 13% to $1 billion in the three months to June from the same period of the previous year. Operating profit fell 11.7% to 160.15 billion yen as revenue dipped 1.9% to 1.11 trillion yen.
While sales of digital single-lens reflex (SLR) cameras and digital compact cameras grew steadily, demand for office equipment in the United States was hit by the credit crunch and economic slowdown, the group said.
For the first half of 2008, net earnings dropped 15.9% to 214.49 billion yen. Operating profits slumped 14.9% to 330.98 billion yen as revenue slipped 2.5% to 2.11 trillion yen.
Canon and its rivals enjoyed a huge boost in recent years from the weakness of the yen against the dollar, which lifted their overseas earnings. But since a US economic slowdown sent the value of the greenback tumbling, while raw material costs soared, Japanese companies have become more cautious about the profit outlook.
Canon maintained its forecast for a modest 2.4% rise in annual net profit to 500 billion yen, which would be another record performance thanks to brisk sales of digital SLR cameras.
The company hopes to cushion the impact of rising raw material prices by trimming costs in other areas. Operating profit is projected to gain 1.8% to 770 billion yen in 2008 as revenue rises 2.4% to 4.59 trillion yen.