Canon Inc on Monday said net profit fell 28.7 percent in its first quarter, falling short of analyst estimates, as the Japanese company faced slumping sales of digital compact cameras.

Profit was JPY 33.93 billion ($285.27 million) in January-March, compared with the JPY 53.64 billion average estimate of 5 analysts according to Thomson Reuters data.

The result comes as the world's biggest camera maker seeks growth opportunities, in part to offset a drop in demand for compacts as consumers increasingly rely on smartphone cameras.

It plans to buy Swedish surveillance firm Axis AB for $2.7 billion – offering 340 crowns ($39.31) a share until the extended deadline of May 5 – and as of Friday owned 84 percent. It does not plan to up its offer even though hedge fund Elliott Management has since raised its ownership to 10 percent.

“Sales volume for low-end (digital camera) models declined due to the ongoing contraction of the market in all regions from the previous year,” said Canon in its earnings release. Sales of high-end models increased, it said.

Canon also said it expects to sell 7.0 million compact cameras in 2015, versus a previous forecast of 7.8 million and 22.5 percent less than in 2014. It projects sales of cameras with interchangeable lenses to reach 5.8 million units rather than its previous view of 6.4 million.

The firm, which earns about 80 percent of revenue overseas and is a major beneficiary of a weaker yen, maintained its view of the Japanese currency trading at 120 versus the US dollar in the second to fourth quarters.

Shares of Canon closed 0.7 percent higher ahead of the earnings release, versus a 0.2 percent fall in the broader market.

Source: [Reuters]

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