TOKYO -- Canon's net profit is likely to shrink 5% this year to 240 billion yen ($2.18 billion) amid a stronger-than-expected home currency and a lackluster performance in its core digital camera operations, the Japanese company said Wednesday.
Sales are expected to edge down 1% to 3.9 trillion yen, with operating profit seen falling 5% to 325 billion yen.
The company expects that the yen's strength against the dollar and euro will erode operating profit by 51.1 billion yen. The company now projects that this year the yen will average 105 against the dollar and 125 against the euro, compared to 110 per dollar and 130 per euro in 2018.
If not for the stronger yen, Canon said profit and revenue would both grow in 2019. It expects a profit boost of about 40 billion yen from cost reduction efforts such as factory automation.
Canon's mainstay digital camera operations are also expected to see continued competition from improved smartphone cameras. Operating profit in the imaging system segment, which includes digital cameras, is projected to tumble 13% to 102 billion yen as sales volume drops over 10%.
Core products like digital cameras and office equipment accounted for roughly 80% of Canon's operating profit in 2018. The company has spent more than 1 trillion yen, or about $9.1 billion, the past decade on acquiring businesses in such fields as medical equipment, surveillance cameras and commercial printers in an effort to develop new earnings sources. But the acquired operation shave yet to make a significant contribution to profits. The operating profit projection for 2019 is less than half the record 756.6 billion yen posted in 2007.
Canon had aimed for a new operating profit high for the three-year period ending in 2020. But Chief Financial Officer Toshizo Tanaka told reporters Wednesday that, "We will have to push back the timeline because of a greater-than-expected contraction in the camera market."
Canon's 2018 net profit climbed 4% to 252.7 billion yen, while sales slid 3% to 3.95 trillion yen.