Canon more than doubled its profit in the latest quarter and forecast its first annual profit growth in three years as brisk digital camera sales more than offset sluggish demand for copiers.
It also said it would not sweeten its €730 million proposal to buy Dutch printer maker Oce NV, despite pressure from two of Oce's top shareholders pushing for a higher price.
Canon said it expects operating profit to jump 52 per cent to 330 billion yen ($3.7 billion) in 2010.
The forecast, which beat the consensus for 319.8 billion yen in a poll of analysts, is underpinned by strong sales of single-lens reflex cameras, a high-end model with interchangeable lenses.
But the rebound in Canon's earnings has been tempered by sluggish demand for copiers and printers as companies worldwide refrain from investing in new office equipment amid worries a tepid economic recovery could peter out.
"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-dipping of the economy," said Naoki Fujiwara, fund manager at Shinkin Asset Management.
Canon, which sells EOS and IXY brand digital cameras and controls about 40 per cent 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, profit fell by more than half to 217.1 billion yen.
Quarterly net profit grew more than fivefold to 61.6 billion yen on sales of 954.1 billion yen, down 4.1 per cent.
"In 2010 the global economy will be in a recovery phase driven by Asia but it's going to be a L-shaped recovery and we expect the environment surrounding our company to remain tough," Canon Managing Director Masahiro Osawa told a news conference.
In an effort to put itself back on a growth path, Canon cut billions of dollars in costs last year and announced a plan to buy Oce, whose strength in high-end and advertisement-use printers would fill a gap in Canon's product line-up.
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 per share bid, arguing it undervalued Oce. That echoed opposition from Orbis Portfolio Management, another large shareholder in Oce.
Ahead of the results, Canon shares closed down 2.8 per cent at 3,615 yen, its lowest in about eight weeks. That underperformed the Tokyo market's electrical machinery index, which fell 1.6 per cent.
Reuters