(RTTNews) - Japanese camera and office equipment maker Canon Inc. (CAJ: News ) reported Tuesday a sharp decline in profit for the third quarter, impacted negatively by lower sales volumes of office equipment and other products as well as stronger yen. Looking ahead, Canon backed its fiscal 2009 earnings and sales forecast, but said it sees weak demand for most of its key products.

Net income for the quarter attributable to the company plunged 55.8% to 36.73 billion yen or 29.76 yen per share form 83.04 billion yen or 65.91 yen per share in the previous year.

Net sales were 774.32 billion yen, down 21.5% from 985.99 billion yen in the prior year, largely due to the effects of reduced sales volumes of office equipment and other products along with the substantial rise in the value of the yen.

Product segment-wise, sales from business machines declined to 488.76 billion yen from 651.00 billion yen in the comparable period. Sales from cameras were 229.03 billion yen, down 8.3% from 249.77 billion yen in the prior year. Optical and other products sales plunged to 56.53 billion yen from 85.21 billion yen in the year-ago quarter.

Region-wise, sales from Japan decreased 17.8% to 161.86 billion yen from 196.97 billion yen in the year-earlier quarter. Americas sales were 217.51 billion yen, lower than 286.12 billion yen, and sales from Europe were 237.45 billion yen, much lower than 316.66 billion yen in the previous year. Sales from other areas dropped to 157.50 billion yen from 186.24 billion yen in the comparable period.

The average value of the yen during the quarter was 93.46 yen to the U.S. dollar, a year-on-year appreciation of about 14 yen, and 133.60 yen to the euro, a year-on-year appreciation of nearly 28 yen.
Canon noted that despite the launch of new products and ongoing cost-cutting efforts aimed at an improved gross profit ratio, the impact of the appreciation of yen and reductions in sales volumes led to a 3.1 point decline in the ratio to 45.1% for the quarter. Consequently, gross profit decreased by 26.5% to 349.3 billion yen.

For the nine-month period, net income attributable to Canon was 70.08 billion yen or 56.77 yen per share, much lower than 297.53 billion yen or 236.00 yen per share in the comparable period. Year-to-date, net sales declined 27.2% to 2.26 trillion yen from 3.10 trillion yen in the year-ago period.

Looking ahead, Canon said it anticipates demand for network digital digital multifunction devices, or MFDs, and laser beam printers will likely remain challenging. Demand for compact digital cameras is expected to remain stagnant for the time being due to the drop in consumer sentiment resulting from the weak economy, but sees strong demand for digital SLR cameras. The company also anticipates demand for inkjet printers will gradually improve.

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