Canon Reports Another Year of Record Earnings, But Forecasts Slower '07 Growth Due to Forex

Jan.29.07 | About: Canon, Inc. (CAJ)

Canon reports its Q4 profit rose 16% to ¥125.6 billion ($1.03b) leading to a seventh consecutive year of record annual earnings, at ¥455b ($3.75b, +18.5% y-o-y). It forecasts net income growth of 8.7% to ¥495b ($4.08b) in '07 and operating profit growth of 8.2% to ¥765b ($6.3b), for another annual record, but short of the ¥771.7b ($6.35b) consensus estimate for operating profit polled by Reuters. Canon-CAJ-1yr-chart-01-26-07 This year will be its slowest earnings growth since 1999, primarily due to an expected lack of positive currency impact. "But the good business environment won't change," according to a Canon financial executive. Full year 2006 operating profit was boosted by ¥78b ($642m) to ¥707b ($5.82b) due to the weaker yen -- more than 75% of its sales are outside of Japan. Sales increased 8.6% in Q4 to ¥1.2t ($9.9b) and rose 10.7% on the year to ¥4.157t ($34.2b). Canon expects sales growth of 7.1% in 2007 to ¥4.45t ($36.6b). Canon said it will buyout SED TV partner Toshiba's stake and still plans to bring SED TVs to market (Japan) in Q4. Its ordinary shares closed flat ahead of its earnings release at ¥6,500 ($53.28 ADR equiv. at ¥122/$1).

• Sources: Earnings release and presentation [pdf], Bloomberg, NYT-AP, NYT-Reuters
• Related commentary: Rumors on the (Anti-Dust?) New Canon 40D, Canon Blows Away Own Q2 Profit Forecast, Ups Full-year Guidance & Dividend, Significance of the Surprisingly Weak Yen
• Potentially impacted stocks and ETFs: Canon (NYSE:CAJ). ETFs: BLDRS Asia 50 ADR Index (NASDAQ:ADRA), iShares S&P/TOPIX 150 (ITF)

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