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Canon seeing no sales downturn, eyes year-end

By Isabel Reynolds

TOKYO (Reuters) - Canon has so far seen no downturn in sales sparked by the European financial crisis, but cannot predict its effect on the year-end shopping season, the company's chief financial officer told Reuters on Wednesday.

"We had a global meeting last week, involving the sales heads from America, Europe and Asia," Toshizo Tanaka said in an interview at the company's Tokyo head office. "At that point, there were no pessimistic comments."

His remarks came days after rival Nikon told Reuters there was some evidence that dealers were putting off orders. Nikon is the world's second-largest player in the profitable single-lens reflex camera market after Canon.

Other consumer electronics makers including Sony and Panasonic have said they are facing an extremely tough environment going into the year-end, usually their most lucrative period, with consumer sentiment flagging amid concerns about debt and unemployment in Europe.

Like other Japanese consumer electronics makers, Canon is being hurt by the strength of the yen against both dollar and euro, and Tanaka said he expected exchange rates to stay near current levels for some time.

"I think rates may stay as they are for quite a while against both the euro and the dollar," he said. "What is happening in Europe is not a cyclical downturn but structural, a financial crisis, so it will take a long time to recover."

The company had predicted exchange rates of 80 yen to the dollar and 115 yen to the euro for the second half of its financial year to December, compared with current levels of about 77 yen to the greenback and 106 yen to the euro.

Each one yen rise in the yen versus the dollar is expected to cut operating profit by 4.8 billion yen and a one yen rise against the euro reduces operating profit by 3 billion yen over the July-December period.

THAI SUSPENSION

Separately, Tanaka said Canon was unsure whether the suspension of operations at its Thai inkjet printer factory would affect profits, adding that the company could make up some, but not all, production at a plant in Vietnam.

Canon said it had closed a printer plant and a printer materials facility in Ayutthaya on October 6 and would be unable to operate them until at least Friday after the country was hit by its worst floods in 50 years.

Canon declined to comment on the Ayutthaya plant's capacity, but said last year it planned to hike it to 8 million units out of a planned global production capacity of 27 million units for 2011.

The company is set to open another inkjet printer plant in northern Thailand within weeks.

The camera and printer maker, which also competes with Hewlett-Packard and Xerox, will announce its July-September earnings on October 25.

Analysts expect it to meet its forecast of a 380 billion yen ($4.95 billion) operating profit for the year to December as cost-cutting balances out the blow from exchange rates.

Shares of Canon dropped 0.3 percent on Wednesday, roughly in line with the Nikkei average. The company's share price has slipped just over 1 percent since the beginning of the financial year on April 1, compared with a 10 percent fall in the Nikkei.

($1 = 76.700 Japanese Yen)

(Reporting by Isabel Reynolds; Editing by Chris Gallagher and Joseph Radford)

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