Canon slashes annual outlook

Japan's Canon slashed its annual outlook to below market expectations as it tries to deal with a quake-hit supply chain that it said was months away from being fixed.

Canon, which competes with Sony Corp and Nikon Corp in cameras and Xerox Corp and Ricoh in copiers, also reported a five per cent fall in quarterly operating profit.

The company said a recovery of the supply chain to levels before last month's earthquake was not expected until June or July.

The world's largest maker of digital cameras on Tuesday lowered its operating profit forecast for the business year to end-December to 335 billion yen (3 billion pounds), 29 percent lower than its earlier estimate.

"The company's revised forecast suggests a tough year for the firm," said Naoki Fujiwara, a fund manager at Tokyo-based Shinkin Asset Management, but added that Canon's issuance of a forecast was a positive sign with many manufacturers not expected to give any guidance.

"I think (the disaster) will have a temporary impact on supply but we have to wait more to see its impact on demand," he said.

Canon slashed its sales target for digital compact cameras for this year to 20 million from 23 million, but kept its sales projections for single-lens reflex cameras – high-end models with interchangeable lenses -- at 7 million.

"Even though we are working on plans to get back in the game in the second half, I think this year will be marked by the harsh conditions that have arisen," Canon CFO Toshizo Tanaka said at a news briefing.