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Japan-Update

Canon to step up repayment of acquisition debt

$1.8bn set aside for 2018 on brisk earnings

TOKYO -- Canon will pay back more interest-bearing debt this year to improve its financial standing following the 2016 acquisition of a medical equipment business from Toshiba.

Repayment will double from 2017 levels to around 200 billion yen ($1.79 billion) in light of strong earnings last year, with an aim of whittling down borrowings from parties including Bank of Tokyo-Mitsubishi UFJ.

Canon upgraded its annual earnings forecast three times in 2017. The final projection called for net profit to increase roughly 60% to 245 billion yen on sales of 4.08 trillion yen, up nearly 20%. Mainstay businesses like digital cameras and office equipment have been faring well, along with such newer operations as medical equipment.

The Tokyo-based manufacturer bought Toshiba Medical Systems for about 665.5 billion yen in 2016. Interest-bearing debt reached 613.1 billion yen as of the end of that year, ballooning from 1.5 billion yen a year earlier.

The faster pace of repayment may also be driven by credit rating considerations. Moody's Japan downgraded Canon from Aa1 to Aa3 in June 2016, citing a material increase in leverage from the purchase of the Toshiba unit. Until then, Canon had been the sole Japanese company with a Moody's rating higher than Aa2.

(Nikkei)

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