TOKYO - JAPAN'S Canon Inc reported an 81.5 per cent fall in quarterly profit as a deepening recession hit demand for cameras and office equipment, and it forecast a bigger-than-expected profit decline for 2009.

Operating profit at Canon, the world's largest digital camera maker ahead of Sony Corp and Nikon Corp, came in at 35.8 billion yen (S$602.6 million) in October-December, down from 193.58 billion yen a year earlier.

Canon's profitability was also hit by steep price falls and the strength of the yen, which makes Japanese products less price-competitive overseas and eats into exporters' revenues when converted into the Japanese currency.

For 2009, Canon forecast an operating profit of 160 billion yen, down from 496.1 billion yen a year earlier and compared with the consensus forecast for a 309.8 billion yen profit in a poll of 16 analysts by Reuters Estimates.

Shares in Canon, which competes with Xerox Corp and Ricoh Co Ltd in copiers and printers, lost 47 per cent over the past year, compared with a 49 per cent fall in the Tokyo market's electrical machinery index. -- THOMSON REUTERS