Japan’s Canon Inc slashed its full-year operating profit outlook by 13 percent as its second-quarter profit missed forecasts, buffeted by a euro zone crisis that has sent the yen climbing while sapping demand from a key export market.
“The global economic slowdown has spread and it looks like growth will continue to be gradual,” Canon Chief Financial Officer Toshizo Tanaka told reporters on Wednesday. “In term of foreign exchange rates, we expect the strong yen to persist for some time.”
The camera and printer maker, which has long been one of Japan’s most profitable technology companies with its aggressive cost-cutting, is now giving an early sign of how euro-zone woes could reach Japanese shores.
Canon lowered its full-year operating profit forecast to 390 billion yen ($5 billion) from a previously forecast 450 billion yen, while posting an operating profit of 92.6 billion yen for the April-to-June quarter.
While the second-quarter figure was up 18 percent from 78.4 billion yen in the same quarter of last year — when Japanese corporate earnings were battered by the March 11 earthquake and tsunami — it missed the average forecast of 107.4 billion yen in a poll of six analysts by Thomson Reuters I/B/E/S.
Canon, which makes 80 percent of its revenue overseas, also cut its forecast average euro rate for the full year to 100 yen from its prior estimate of 105 yen.
The maker of IXY and PowerShot cameras, which competes with Nikon and Sony Corp, said foreign exchange rate movements cut 21.2 billion yen from its operating profit in the April-to-June quarter.
Europe’s woes have also begun to hurt Canon’s global rivals.
In the office machine sector, which generates more than half of Canon’s revenue, rival Xerox reduced its full-year profit target last week after second-quarter results were hit by a sharp drop-off in technology spending in Europe.
Shares in Canon ended down 0.9 percent at 2,678 yen ahead of the results announcement, after slipping to their lowest level since March 2009 as the euro weakened against the yen. The stock has shed more than 20 percent this year.
Tokyo’s benchmark Nikkei average slipped 1.4 percent on Wednesday and is little changed since the start of the year.