Canon to bring production home as yen continues slide

TOKYO Thu Jan 9, 2014 1:46pm IST

Canon Inc Chairman and CEO Fujio Mitarai speaks next to the company's digital SLR camera EOS-1D X during an interview with Reuters at the company's headquarters in Tokyo January 9, 2014. REUTERS/Yuya Shino

Canon Inc Chairman and CEO Fujio Mitarai speaks next to the company's digital SLR camera EOS-1D X during an interview with Reuters at the company's headquarters in Tokyo January 9, 2014.

Credit: Reuters/Yuya Shino

Related Topics

Stocks

   
Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

TOKYO (Reuters) - Japan's Canon Inc, the world's largest camera maker, is looking to ramp up capacity at home as it anticipates a further slide in the yen to make domestic manufacturing cheaper.

Canon shifted camera and photocopier production abroad as the yen soared in the wake of the 2008 financial crisis making Japan-made goods expensive overseas. But is now set to reverse that move as it banks on the prime minister's economic stimulus plan, known as Abenomics, to push the yen below pre-crisis levels.

The company, which derives around 80 percent of revenue from overseas, will raise the proportion of products made in Japan to 50 percent within the next three years from 42 percent, Chief Executive Fujio Mitarai told Reuters in an interview on Thursday.

Mitarai said he was "looking forward" to seeing the yen extend its slide further this year after it fell more than 20 percent in 2013, and that he hoped that will help boost revenue and profit growth by more than 5 percent in 2014.

A weaker yen means it is cheaper to make goods in Japan, and boosts the value of overseas revenue once repatriated.

However, the dramatic shrinkage of the compact camera market in 2013 - estimated at 40.2 percent by researcher IDC - and an unforeseen weakening in high-end camera sales means Canon will likely miss its guidance for 2013 even after cutting its profit forecast at its last two earnings announcements.

Mitarai said Canon's revenue likely rose around 7 percent last year against a targeted 7.8 percent increase to 3.75 trillion yen, while operating profit was likely flat against guidance growth of 11.2 percent. The company reports its results for fiscal 2013 on January 29.

SLR SALES

The CEO said sales of digital single-lens reflex cameras likely came in under 8 million units in 2013 for the first annual decline since Canon introduced its first model in 2004, as the slowing pace of innovation meant fewer consumers felt the need to replace older models. He also attributed the drop to prolonged economic weakness in Europe and slowing growth in China.

"SLR sales fell last year due to poor economic conditions," Mitarai said. "But I think that they will rise stably from now on. I want to aim for close to 9 million units in 2014."

But industry insiders said Canon and its closest rival Nikon Corp (7731.T) were struggling to clear excess inventory built up as they overcompensated for damage done to factories in Thailand after flooding in 2011 - leading to prices of entry-level models being slashed by more than 50 percent to as little as $300.

Canon's shipments of interchangeable lens cameras accounted for 45.1 percent of global shipments in July-September, according to IDC, a 5 percent drop in share from the year prior and a 25.7 percent drop in unit sales.

Shares of Canon ended Thursday down 2 percent, compared with a 1.5 percent decline in the benchmark index .N225. They fell 0.3 percent in 2013, against a 57 percent increase in the Nikkei.

(Editing by Christopher Cushing)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Internet Constitution

REUTERS SHOWCASE

Chip Company

Chip Company

Panasonic, Fujitsu to form chip design, development company  Full Article 

Huawei Shrugs

Huawei Shrugs

China's Huawei says reports of NSA spying won't impact growth  Full Article 

Google Mobile

Google Mobile

Google extends reach into mobile apps with new ad feature  Full Article 

Internet Conference

Internet Conference

Brazil conference will plot Internet's future post NSA spying   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage