Business / Corporate

Canon CFO says investing in Toshiba's chip business 'difficult'

Kyodo

Canon Inc. views it as difficult to invest in Toshiba Corp.’s flash memory business because the company already has a number of investment projects going on and sees little time left to assess its property, Canon Chief Financial Officer Toshizo Tanaka said Tuesday.

Speaking at a news conference to report Canon’s 2016 earnings results, Tanaka said the company is making a “major strategic transition” to shift its axis for growth from conventional mainstay businesses such as digital cameras and copiers to new businesses, including medical equipment.

“To that end, we have a range of investments coming up. Considering the situation, it would be very difficult to invest in Toshiba’s semiconductor operation,” Tanaka said, adding this is “our outlook at this moment.”

Canon has emerged as a potential buyer of Toshiba’s lucrative semiconductor operation as its Chairman Fujio Mitarai said in a recent interview that the chip business “has high value” and that Canon will “positively consider” investing in it.

Semiconductor manufacturing equipment maker Tokyo Electron Ltd., also seen as a potential buyer of a stake in the chip unit, also denied the possibility of investing Tuesday, with Representative Director Tetsuro Hori saying at a news conference the company “is not considering” such an option.

Embattled Toshiba plans to spin off its chip business and sell a stake to a third party by the end of March to make up for losses stemming from massive writedowns in its U.S. nuclear business.

U.S. data storage company Western Digital Corp. — a joint operator of Toshiba’s Yokkaichi flash memory plant — and an overseas investment fund are seen to be other remaining possible buyers.

In its earnings announcement, Canon said its group net profit in 2016 fell 31.6 percent from a year earlier to ¥150.7 billion, citing negative effects from a higher yen and falling demand for compact digital cameras.

The digital camera and office equipment maker had slashed its earnings forecasts for the year three times and the profit figure was under Canon’s latest projection of ¥165 billion.

Tokyo-based Canon reported that its operating profit fell 35.6 percent to ¥228.9 billion last year, with sales down 10.5 percent to ¥3.4 trillion.

While the market for such mainstays as cameras and copiers matures amid the spread of smartphones and paperless media, the yen’s appreciation in 2016 had an adverse impact of ¥102 billion on Canon’s operating profit, the company said.

But for 2017, Canon said it expects group net profit to increase 12.8 percent to ¥170 billion, projecting positive effects from the acquisition late last year of Toshiba Medical Systems Corp. and sales growth for flat panel display lithography equipment.

The company said its operating profit is seen rising 11.4 percent to ¥255 billion, with sales projected to rise 17.6 percent to ¥4 trillion.

In generating the forecast, Canon assumed an average foreign exchange rate of ¥110 to the U.S. dollar and ¥120 to the euro in 2017.

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