TOKYO (Reuters) – Japan’s Canon Inc (7751.T) raised its annual outlook closer to market expectations on Monday after robust demand for digital cameras and printers powered up its quarterly profit by more than fourfold.

Japan

The result marked Canon’s second straight quarter of year-on-year profit growth after eight quarters of decline and underscored a budding recovery in office equipment that is also boosting rivals Xerox Corp (XRX.N) and Ricoh Co (7752.T).

Canon benefited from growing demand for single-lens reflex cameras as the customer base continued to spread from professional photographers and camera enthusiasts to casual users thanks to the launch in recent years of introductory models.

Canon is the world’s top maker of digital cameras ahead of Sony Corp (6758.T) and dominates the lucrative SLR segment along with Nikon Corp (7731.T).

“The demand for digital cameras continues to be strong, and chip equipment demand is also coming back, so the business environment is cyclically improving,” said Kazuyuki Terao, chief investment officer at Japanese fund manager RCM Japan Co.

“The trend toward yen weakness is also positive, so the business environment is good. There are few negative factors right now.

Canon said it now expects an operating profit of 360 billion yen ($3.8 billion) for 2010, up from its previous forecast of 330 billion yen, though still short of the 371.2 billion yen consensus in a poll of 20 analysts by Thomson Reuters I/B/E/S.

The latest forecast compares with a 217.06 billion yen profit last year.

Analysts on average expect Canon to post double-digit profit growth for another two years before expansion slows in 2013, according to Thomson Reuters data, though growth in its compact camera business could be threatened if price competition intensifies further.

Canon Executive Officer Masahiro Haga said the office equipment market had hit bottom and would recover gradually.

“Laser printers along with their consumables are recovering strongly. As for copiers, the degree of recovery varies from region to region,” Haga told reporters after a news conference.

“But judging from the overall operating environment in the first quarter, our business seems to have hit bottom and is heading for a mild recovery.”

Canon said in September that it would start providing its multi-functional printers to Hewlett-Packard (HPQ.N), in a move to broaden HP’s lineup of office equipment and boost Canon’s hardware sales.

The Tokyo-based company also took over Dutch printer maker Oce NV (OCEN.AS) this year to strengthen its product lineup and broaden its distribution channels.

For January-March, the maker of IXY and EOS brand digital cameras posted an operating profit of 86.84 billion yen, up from a profit of 20.03 billion yen in the same period last year amid the depths of the global economic downturn.

Quarterly sales jumped 10 percent to 755.5 billion yen.

In light of growing demand for high-end cameras, Canon raised its digital SLR camera sales target by 4 percent to 4.9 million units.

In 2009, Canon held a 44.7 percent share in the market for digital SLR cameras, high-end models with interchangeable lenses, followed by Nikon with 34.3 percent, according to research firm IDC.

Canon’s result comes three days after rival Xerox posted stronger-than-expected first-quarter operating profit, driven by demand for its document management and printing services.

Before the announcement, Canon shares closed up 3.5 percent at 4,395 yen, outperforming the Tokyo stock market’s electrical machinery index .IELEC.T, which rose 2.6 percent.

Canon shares have gained 12 percent so far this year versus a 15.5 percent rise in the sector index. ($1=93.91 Yen) (Additional reporting by Sachi Izumi in TOKYO and Anshuman Daga in SINGAPORE; Editing by Chris Gallagher)

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DETROIT (Reuters) – General Motors Co posted a net loss for 2009, but said it was possible to make a profit this year and that it was laying the foundation to return to public ownership.

GM reported a $4.3 billion 2009 net loss covering the period from its emergence from bankruptcy in July through the end of the year in the automaker’s first full account of its new balance sheet as a restructured company.

The automaker said it had repaid $2.8 billion of its loans from the U.S. Treasury and Export Development Canada by the end of March and planned to repay the remaining $5.6 billion by June “at the latest.”

GM, which received $50 billion of U.S. taxpayer support for the restructuring, has aimed to move faster to jump-start sales and launch an initial public offering that would allow the U.S. government to reduce its majority stake in the automaker.

GM Chief Financial Officer Chris Liddell said he was “incredibly encouraged” by the company’s progress in the first quarter toward a profit in 2010 and said GM would never again find itself in the financial position it experienced before the bankruptcy.

“There is nothing that I’ve seen in the first quarter — which you’ll see in a month’s time — that changes my opinion that there is a good chance that we will be profitable this year,” Liddell said in a conference call.

After accumulating losses of about $88 billion from 2005 through the first quarter of 2009, GM’s predecessor company fell into a government-supported bankruptcy. The U.S. Treasury currently holds a stake of more than 60 percent in the new GM.

The U.S. Treasury expects GM eventually to be strong enough to attract sufficient investment and return to profitability. It had no comment on GM’s financial statement on Wednesday.

GM GENERATES CASH FROM JULY-DECEMBER

“I think they’ve got a modest to good chance of becoming profitable in one of the quarters this year,” said Mike Boudreau, of the turnaround firm O’Keefe & Associates, citing improvements in the economy and reduced structural costs.

GM generated $1 billion of operating cash during the period from its emergence from bankruptcy until the end of the year, but said significant work remained.

In the results released on Wednesday, GM said its losses from July to the end of 2009 included a $2.6 billion pretax loss related to a United Auto Workers union retiree healthcare program and $1.3 billion for foreign currency adjustments.

For the fourth quarter, GM reported a $3.4 billion net loss and revenue of $32.3 billion.

GM ended 2009 with $36.2 billion in cash, compared with $14.2 billion at the end of 2008.

The restructuring helped the new GM eliminate debt and build its cash, but the automaker’s sales overall remain under pressure after its elimination of unprofitable brands.

GM is shutting down the Pontiac, Saturn and Hummer brands and has sold the Swedish Saab brand to Spyker Cars (SPYKR.AS).

The automaker’s U.S. sales were up 17 percent in the first quarter from a year earlier when the industry was hitting its lowest levels since the early 1980s and GM was sliding toward bankruptcy.

However, GM’s U.S. market share of 18.7 percent in the first quarter was down from 19.6 percent for all of 2009, a year in which it lost 2.5 percentage points of U.S. share.

Chief Executive Ed Whitacre, who replaced CEO Fritz Henderson in December, has shaken up senior management including its sales and marketing teams in recent months to push for a faster turnaround.

GM’s global market share dropped to 11.6 percent in 2009, down from 12.4 percent in 2008, with sales overall at about 7.5 million vehicles last year including medium and heavy trucks.

Liddell said GM did not need U.S. auto industry sales to increase significantly in 2010 from last year for the company to be profitable this year.

U.S. auto industry sales fell to about 10.4 million vehicles in 2009, the worst result since the early 1980s. Most industry experts expect sales to increase to a range of 11.5 million vehicles to 12.5 million in 2010.

(Additional reporting by David Bailey, editing by Gerald E. McCormick and Matthew Lewis)

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