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Japan-Update

Canon operating profit seen growing 10% in 2017 after 2-year drop

New acquisitions seen fueling Japanese electronics maker's profit upturn

TOKYO -- Canon's group operating profit is seen topping 250 billion yen ($2.17 billion) for the fiscal year ending December 2017, roughly 10% over the expected figure for 2016, with two years of decline reversing on strong earnings from recent acquisitions.

Sales for the Japanese electronics company are seen growing nearly 20% to 4 trillion yen -- a height last seen in fiscal 2008. Toshiba Medical Systems, acquired late last year, will likely contribute some 400 billion yen in income. Canon uses American accounting standards.

As the market for such mainstays as cameras and printers matures, recent acquisitions should support the upswing in operating profit. New businesses will likely contribute a quarter of the group's total sales, up about 10 percentage points on the year.

Canon bought Dutch commercial printing powerhouse Oce in 2010 and Swedish surveillance camera maker Axis Communications in 2015. Both will likely see demand grow from Western corporations. Another Canon arm produces metal deposition equipment -- crucial for producing OLED screens -- for which demand is growing rapidly.

The company is investing actively in China and sees improvement for its production equipment for semiconductors and liquid crystal panels. Earnings from such mainstay products as cameras and printers will likely bottom out.

Canon is assuming an exchange rate of roughly 110 yen to the dollar for the fiscal year -- weaker than last year's 108 but seen as stronger than the actual figure. Further depreciation by the Japanese currency would make profit grow even more. The company also intends to continue promoting sales and cutting costs on such high-margin offerings as mirrorless cameras.

Fiscal 2016 earnings are due out Tuesday. Operating profit likely fell 35% on the year to 230 billion yen, slightly under Canon's projection of 235 billion yen.

(Nikkei)

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