Sanyo Press Release 28/10/04

TOKYO, Oct 28 (Reuters) - Japanese electronics maker Sanyo Electric Co. Ltd. lowered its digital camera production target for the current business year by over 20 percent on Thursday due to weaker than expected demand.

Sanyo is one of the world’s largest manufacturers of digital cameras, but more than 90 percent of its output supplies other companies such as Olympus Corp. and Nikon Corp. under original equipment manufacturer (OEM) agreements.

The Osaka-based company slashed its production target for the current business year to March 31 to 14 million units from 18 million units, and said it planned to lower its output capacity target to 15 million digital cameras from 20 million.

“Inventories increased a bit to levels that exceeded our initial expectations so we have cut back on our production plans,” said Sanyo spokesman Atsushi Watanabe.

Digital cameras are one of the pillars of the recent digital electronics boom, but growth is slowing in Japan and other key markets due to rising penetration rates, and manufacturers are struggling to maintain profit margins as prices fall.

Canon Inc. also cut its digital camera forecast on Thursday. It now expects to sell 14.7 million units in 2004, down from its previous estimate of 15.2 million. Canon sold 8.6 million digital cameras last year.

Earlier on Thursday, Sanyo said its group net profit for the six months to Sept. 30 fell 65 percent to 3.4 billion yen from 9.78 billion yen a year earlier, citing falling product prices and higher raw materials costs.

Sanyo cut its group net profit forecast for the full year to March to 14 billion yen from 16 billion yen, while trimming its sales outlook by 20 billion yen to 2.58 trillion yen.

Shares of Sanyo ended Thursday trade up 1.17 percent at 346 yen before the announcement, roughly in line with the benchmark Nikkei average’s gain of 1.51 percent. ($1=106.63 yen).