Canon, Nintendo find solace in Abenomics as weaker yen boosts outlook Super Mario creator Nintendo Co. Ltd. is forecasting a return to the black after two years of losses while camera maker Canon Inc. raised its profit forecast by nearly 10 per cent as a weaker yen, spurred by aggressive deflation-fighting policies, bolsters the outlook of Japan's tech companies. The two companies, however, show no sign of reciprocating the government's helping hand with fresh job-creating investment. Canon, still worried about a struggling global economy, pared its capital expenditure. As the first blue-chip Japanese tech companies to report quarterly results, Nintendo and Canon are often seen as a barometer for the sector's earnings. The tech sector directly employs about two million workers in Japan. "We welcome Abenomics," Canon chief financial officer Toshizo Tanaka said at a news briefing Wednesday, acknowledging the impact of Prime Minister Shinzo Abe's economic stimulus policies. "The Japanese economy moves on this kind of mood so we value this and hope to find success," he added. At Canon, a weakening yen is helping to compensate for a squeeze on compact camera sales as consumers switch to photo snapping on their smartphones. And the softer Japanese currency may buy Nintendo more time to plug its newest offering, the Wii U, which has disappointed with dull sales as it also competes with smartphones and tablets. For the business year to Dec. 31, Canon, which relies on foreign markets for four-fifths of its sales, lifted its operating profit forecast to ¥450-billion ($4.5-billion U.S.). Nintendo, which generates three-quarters of its revenue abroad, forecast an operating profit of ¥100-billion after two years of losses as its Wii boom ebbed. Canon raised its forecast dollar rate for the year to 95 yen, compared with the 85 yen forecast issued just three months earlier. Nintendo estimated a rate of 90 yen to the dollar for the year to next March. Its president, Satoru Iwata, told a briefing in Osaka that the figure is "conservative." For Japanese business leaders worried about their ability to compete globally, particularly against South Korean rivals such as Samsung Electronics Co. Ltd. and LG Electronics Inc., the yen decline fulfills a long-held wish. Fabricating goods worth almost $400-billion (U.S.) a year, Japanese makers of TVs, mobile phones, printers and personal computers account for a sizeable chunk of Japan's $5-trillion (U.S.) economy. Canon's operating profit in the first quarter dipped 34 per cent to $552-million (U.S.), which the company blamed on a weakened global economy and increased competition from smartphones. Nintendo posted a full-year operating loss of ¥36.4-billion. Corporate leaders who have praised Abenomics include Sony Corp. CEO Kazuo Hirai. His company and other Japanese TV makers, Panasonic Corp. and Sharp Corp., have struggled to fend off competition from Samsung as a strong yen bit into profits. Sony, with its bigger exposure to overseas markets, is the best-placed among TV makers to gain from a weaker yen, particularly versus the euro. A one-yen drop against the European single currency adds about ¥6-billion to its operating profit. At Panasonic, a one-yen weakening against the euro boosts operating profit by ¥2-billion, while it reaps a ¥2.5-billion yen gain for declines against the U.S. dollar. At Sharp, which more heavily relies on its home market, a one-yen move is worth around ¥500-million in operating profit against the euro and ¥700-million against the dollar. More than one-third of Japanese companies remain worried about domestic demand stagnating, a Reuters survey of 240 companies released on Friday shows. A quarter said they were likely to increase output in Japan because of the weaker yen. Wednesday's results, however, produced no signs that Abenomics is encouraging a boost in capital spending. Canon, which stands to benefit more than most Japanese companies from a weak yen, trimmed its capital expenditure for the business year to ¥265-billion from ¥270-billion. "Dramatic monetary easing has prompted a revision of the strong yen, but there are still uncertainties surrounding the U.S. budget problems and European debt issues," Mr. Tanaka cautioned.