UPDATE 3-Canon forecasts growth; says won’t sweeten Oce bid

* Q4 op profit 92.1 bln yen, vs 35.8 bln yen a year earlier

* Sees 52 pct jump in 2010, first annual growth in 3 years

* Strong high-end digital camera demand boosts earnings

* Says no plans to sweeten 730 mln euro offer for Oce

* Full-fledged recovery won’t come till 2011 -investor
(Adds link to graphic, Canon executive’s comments, background)

By Kiyoshi Takenaka

TOKYO, Jan 27 (BestGrowthStock) – Japan’s Canon Inc (7751.T: ) forecast
its first annual profit growth in three years after more than
doubling its profit last quarter, as the camera and office
equipment maker shifts gear back into expansion.

It also said it would not sweeten its 730 million euro ($1
billion) proposal to buy Dutch printer maker Oce NV (OCEN.AS: ),
despite two top Oce shareholders pushing for a higher price.

Canon, which posted eight straight years of profit growth
before the global downturn in 2008, cut $2.6 billion in costs,
broadened its ties with Hewlett-Packard (HPQ.N: ) and unveiled a
plan to buy Oce last year to get itself back on the growth path.

The world’s largest digital camera maker ahead of Sony Corp
(6758.T: ) said it expected its operating profit to jump 52 percent
to 330 billion yen ($3.7 billion) in 2010.

The forecast, which beat the consensus for 319.8 billion yen
in a poll of 21 analysts by Thomson Reuters I/B/E/S, is
underpinned by strong sales of single-lens reflex (SLR) cameras,
a high-end model with interchangeable lenses, and a nascent
recovery in office equipment demand.

Since the financial crisis, companies worldwide have
refrained from investing in new copiers and printers, in a blow
to Canon as well as rivals Xerox Corp (XRX.N: ), Ricoh Co Ltd
(7752.T: ) and Konica Minolta Holdings Inc (4902.T: ).

Canon said signs of a recovery in the office equipment market
are slowly emerging, but the business environment for the company
will likely remain tough in 2010.

“I would not expect Canon to post a full-fledged recovery
until next year. The risk factors for the company are a higher
yen and a double-dip in the economy,” said Naoki Fujiwara, fund
manager at Shinkin Asset Management.

Canon is assuming a dollar/yen exchange rate of 90 yen for
this year and a euro/yen rate of 130 yen. The yen was firmer than
the assumed rates for both currencies on Wednesday evening.


Canon, which sells EOS and IXY brand digital cameras and
controls about 40 percent of the digital SLR camera market, said
its October-December operating profit was 92.1 billion yen versus
35.8 billion yen a year earlier.

It was the company’s first year-on-year profit gain in nine
quarters but still less than half what it earned in the same
period two years ago, ahead of the global economic downturn. For
2009, its profit fell more than half to 217.1 billion yen.

For a graphic of Canon’s quarterly operating profit and share
price moves, click:

“It turned out 2009 was an unprecedentedly difficult year,
where the global downturn was joined by a sharply higher yen,”
Canon Managing Director Masahiro Osawa told a news conference.

In 2008, rival Ricoh bought major U.S. office equipment
distributor Ikon Office Solutions. Canon machines had accounted
for 60 percent of the products Ikon handled.

In response, Canon last year offered 8.6 euros per Oce share
to but the Dutch company, whose strength in high-end and
advertising-use printers would fill a gap in Canon’s product

But some Oce shareholders have opposed the tender offer,
which Canon has said it would launch by March.

Hermes Focus Asset Management has said it would not tender
its shares in the 8.60 euro per share bid, arguing it undervalued
Oce. Orbis Portfolio Management, another large shareholder in
Oce, also opposes the offer. [ID:nT209918] [ID:nLDE60A2BH]

Canon’s Osawa said on Wednesday the company has no intention
at the moment of changing its offer price.

“I believe we are offering an appropriate price,” he said.

Ahead of the results, Canon shares closed down 2.8 percent at
3,615 yen, its lowest in about eight weeks. That underperformed
the Tokyo market’s electrical machinery index (.IELEC.T: ), which
fell 1.6 percent.

Stock Investing

(Additional reporting by Nathan Layne and Taiga Uranaka; Editing
by Ian Geoghegan and Edwina Gibbs)

UPDATE 3-Canon forecasts growth; says won’t sweeten Oce bid