Canon, Nintendo find solace in Abenomics as weaker yen boosts outlook

Wed Apr 24, 2013 5:36am EDT
 
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By Tim Kelly and Mari Saito

TOKYO (Reuters) - Super Mario creator Nintendo Co Ltd forecast a return to the black after two years of losses and camera maker Canon Inc raised its profit forecast by nearly 10 percent as a weaker yen, spurred by aggressive deflation-fighting policies, bolstered the outlook of Japan's tech companies.

The two companies, however, show no sign of reciprocating the government's helping hand with fresh job-creating investment. Canon, still worried about a struggling global economy, pared its capital expenditure.

As the first blue-chip Japanese tech companies to report quarterly results, Nintendo and Canon are often seen as a barometer for the sector's earnings. The tech sector directly employs around 2 million workers in Japan.

"We welcome Abenomics," Canon Chief Financial Officer Toshizo Tanaka said at a news briefing, acknowledging the impact of Prime Minister Shinzo Abe's economic stimulus policies.

"The Japanese economy moves on this kind of mood so we value this and hope to find success," he added.

At Canon, a weakening yen is helping to compensate for a squeeze on compact camera sales as consumers switch to photo snapping on their smartphones. And the softer Japanese currency may buy Nintendo more time to plug its Wii game console successor, the Wii U, which has disappointed with dull sales as it also competes with smartphones and tablets.

For the business year to December 31, Canon, which relies on foreign markets for four-fifths of its sales, lifted its operating profit forecast to 450 billion yen ($4.53 billion).

Nintendo, which generates three-quarters of its revenue abroad, forecast an operating profit of 100 billion yen after two years of losses as its Wii boom ebbed.   Continued...

 
A man walks on an advertisement of Canon digital cameras at an electronics retail store in Tokyo April 23, 2013. Japan's Canon Inc said first quarter operating profit fell 34 percent year-on-year, hurt by weaker demand for compact cameras as consumers switched to smartphones. Picture taken April 23, 2013. REUTERS/Toru Hanai