Canon Profit Tumbles 86%, Company Cuts Sales Forecast

Canon Inc., the world’s biggest maker of multifunction printers, said second-quarter profit declined 86 percent and cut its annual sales target, citing “sluggish” demand for office equipment.

Net income dropped to 15.6 billion yen ($164 million) from 107.8 billion yen a year earlier, the Tokyo-based company said today. That missed the 18 billion yen median of three analyst estimates compiled by Bloomberg News.

Canon will introduce new models of products including digital cameras and inkjet printers to help revive “stagnant” demand, the company said today. It’s aiming to double planned cost reductions to weather the economic slowdown it expects to last for most of this year as unemployment increases in developed markets.

“We will continue cutting costs to achieve a reduction of 220 billion yen this fiscal year, which is double our target at the start of the year,” Masahiro Osawa, senior managing director in charge of Canon’s accounting, told reporters in Tokyo.

Operating profit, or sales minus the cost of goods sold and administrative expenses, slumped 72 percent to 44.9 billion yen as revenue dropped 28 percent to 793.8 billion yen in the quarter.

Canon slipped 0.3 percent to close at 3,370 yen in Tokyo trading before the earnings announcement, narrowing its gain this year to 22 percent. That compares with a 14 percent advance by Japan’s benchmark Nikkei 225 Stock Average in 2009.

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