Canon hit by Japan-China dispute

It?s not just the Japanese carmakers that have suffered from their country?s territorial dispute with China.

Canon, the camera and office equipment manufacturer, reported on Wednesday that its sales in China fell by more than 30 per cent last year due, as the company put it, to a ?cooling off of demand in China during the latter half of the year?.

The Beijing-Tokyo spat compounded difficulties caused by weak economic growth in Europe, consumers switching from cameras to smartphones, and the strength of the yen. The group?s results ? and its 2013 forecast ? fell well short of analysts? forecasts.

Canon reported a 14.5 per cent decline in consolidated annual operating profits to Y323.8bn ($3.72bn) on a 2.2 per cent drop in sales to Y34809bn. Net profits were down 9.7 per cent at Y224.6bn.

Operating profits in the fourth quarter, when the tensions in China were particularly acute, fell 17.9 per cent to Y77.7bn on a 1.4 per cent decline in sales to Y951.4bn.

Canon said it hoped to benefit the yen?s recent weakening and forecast a full-year operating profit increase for 2013 of 26.4 per cent to Y410bn, compared with the average expectation of a Y443.3bn profit from 21 analysts polled by Reuters. Canon predicts a 14 per cent rise in net profits to Y255bn ($2.8bn).

Commenting on 2012, Canon said in its results statement:

Owing to the economic slowdown mainly in Europe and the high valuation of the yen against the euro, combined with the cooling off of demand in China during the latter half of the year, the Canon Group faced increasingly challenging conditions across all of its businesses.

For 2013, the group is strikingly upbeat for most regions except Europe:

As for the outlook in 2013, while the challenging conditions from the previous year will continue, the global economy is expected to realize a moderate recovery in the latter half of the year. The U.S. economy is expected to achieve moderate growth thanks to improved unemployment conditions and housing issues. In Europe, since a significant amount of time will likely be needed to realize a recovery, the region?s economy will likely remain sluggish throughout the year. Emerging economies such as China and India are expected to recover from the previous year?s temporary slowdown to achieve high rates of growth. Japan, buoyed by aggressive economic policies and the recovery of the global economy, is expected to emerge from recession in the latter half of the year.

Canon is among the first top Japanese companies to report 2012 results, so there will be other groups with stories to tell about their travails in China. The results were announced after the Tokyo stock market closed.

Related reading:
China and Japan attempt to ease tensions, FT
Diaoyu ? they dont call ?em the fishing islands for nothing! beyondbrics
Chinese dispute dents Toyota and Nissan, FT

Source: http://blogs.ft.com/beyond-brics/2013/01/30/canon-hit-by-japan-china-dispute/

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