UPDATE 2-Canon raises annual outlook, Q3 profit jumps 74 pct

* Q3 op profit Y104.4 bln vs Y89.5 bln consensus

* Raises full-year outlook by 8 pct to 390 billion yen

* Revises dollar/yen rate assumption to 80 from 90 yen

* Trims full-year sales fcast to 3.71 trln yen from 3.75
trln

* Canon shares down 5.5 pct ytd vs 12 pct market drop
(Adds fund manager comment, details)

By Isabel Reynolds

TOKYO, Oct 27 (BestGrowthStock) – Canon Inc (7751.T: ) staved off the
impact of a strong yen and raised its full-year outlook as
strong sales of office equipment and digital cameras helped it
beat forecasts with a 74 percent jump in quarterly profit.

The pace of earnings growth may be slowing, however, as the
benefits of recovering volumes run their course for Canon, the
world’s biggest maker of digital cameras, ahead of Sony Corp
(6758.T: ) and Nikon Corp (7731.T: ).

Last month, Chairman Fujio Mitarai said he was keen to
pursue mergers and acquisition opportunities in medical and
industrial technology. [ID:nTOE68R07L]

Along with rival technology exporters Sony and Nikon Corp,
Canon faces the challenge of coping with a strengthening yen
that is crimping the value of overseas earnings.

“While the revised forecast is roughly in line with the
consensus, I think these are positive figures because some
expected Canon to keep its outlook given the yen’s gain,” said
Naoki Fujiwara, a fund manager at Shinkin Asset Management.

On Wednesday, Canon revised its dollar-yen exchange rate
assumption to 80 from 90 yen. Many other Japanese firms had
also set their dollar rate assumptions at 90 yen. The dollar
has slumped to 15-year lows, and stood at about 81.7 yen (JPY=: )
on Wednesday.

For the full year to Dec. 31, Canon, the maker of IXY
compact cameras and high-end EOS cameras, now expects operating
profit of 390 billion yen ($4.79 billion) versus a previous
forecast of 360 billion yen.

That is still lower than a consensus forecast of 396.4
billion yen in a poll of 16 analysts by Thomson Reuters
I/B/E/S.

The results marked the fourth straight quarter of
year-on-year profit growth for Canon.

Canon’s July-September operating profit was 104.42 billion
yen, compared with 59.9 billion a year ago and a consensus
forecast of 89.5 billion yen in a poll of four analysts by
Thomson Reuters I/B/E/S.

The company lifted its forecast for digital camera sales
for 2010 to 5.7 million from 5.5 million. Earnings from
photocopiers, printers and other office equipment jumped 30
percent.

Xerox Corp, (XRX.N: ), Canon’s rival in office equipment,
beat quarterly profit estimates last week, signaling a rebound
in companies’ confidence about spending. [ID:nSGE69K0H4]

Canon shares have fallen about 5.5 percent so far this
year, compared with a 12 percent fall in the Nikkei average.
Its shares ended 2.3 percent lower on Wednesday in a flat
broader (.N225: ) market ahead of the results.
($1=81.41 Yen)
(Additional reporting by Taiga Uranaka; Writing by Tim Kelly;
Editing by Michael Watson and Anshuman Daga)

UPDATE 2-Canon raises annual outlook, Q3 profit jumps 74 pct