Canon Q1 profit drops 5 percent, cuts annual outlook

TOKYO (Reuters) - Canon Inc <7751.T> reported a 5 percent fall in quarterly operating profit and cut its annual outlook on Tuesday as it copes with the effects of Japan's earthquake, which halted some production and looks likely to hinder it further.

The world's largest maker of digital cameras said its operating profit for the January-March quarter was 82.5 billion yen ($1.0 billion), after the March 11 earthquake and tsunami led to shortages of components.

Profits at Canon, which competes with Sony Corp <6758.T> and Nikon Corp <7731.T> in cameras and Xerox Corp <XRX.N> and Ricoh Co Ltd <7752.T> in copiers, have been under pressure as it has been unable to resume full production at some plants.

The company, which also makes ink jet printers, cut its operating profit forecast for its business year to the end of December to 335 billion yen from its earlier estimate of 470 billion. That was below an average estimate of 396.5 billion yen in a poll of six analysts taken after the quake by Thomson Reuters I/B/E/S.

By Monday's close, the company's shares had fallen about 7 percent since the quake versus a nearly 6 percent decline in the benchmark Nikkei average <.N225>. ($1 = 81.845 Japanese Yen)

(Reporting by James Topham; Editing by Nathan Layne)