Canon says supply chain recovery after Japan earthquake will take until June or July

Canon slashes profit outlook after Japan earthquake

Canon has cut its annual outlook to below market expectations as it tries to cope with its earthquake-hit supply chain.

Japan's earthquake has halted some production and Canon says a recovery of its supply chain to levels before the disaster will take until June or July.

Canon, the world's largest maker of digital cameras, has lowered its operating profit forecast for the business year to end-December to 335 billion yen ($4.1 billion), 29 per cent lower than its earlier estimate.

It has also reported a five per cent fall in quarterly operating profit.

"The company's revised forecast suggests a tough year for the firm," said Naoki Fujiwara, a fund manager at Tokyo-based Shinkin Asset Management.

However Canon's issuance of a forecast was a positive sign with many manufacturers not expected to give any guidance, he added.

"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 seven 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.

The disruption of parts supply in Japan has also affected a wide range of electronics makers, including many overseas, such as Apple and Texas Instruments .

Xerox posted a rise in quarterly profit last week, but said it sees some "product constraints" in the middle of the second quarter due to the disaster and does not expect a full-product recovery until later this year.

The maker of EOS and IXY digital cameras, like many Japanese manufacturers, had to deal with component supply shortages and rolling blackouts following the massive earthquake and tsunami and the subsequent nuclear crisis.

Canon was forced to halt operations at its main camera factory on the southern island of Kyushu in March due to a shortage of parts following the quake, but Tanaka said it is now running around 70 per cent of capacity.

Ricoh is expected to report earnings this week, while Sony and Nikon are scheduled to post results next month.

Shares of Canon have fallen eight per cent since the quake versus a decline of about seven per cent in the benchmark Nikkei average.

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