The plant in Virginia will buffer the impact of currency fluctuations and rising transport costs on its U.S. business, the company said. Canon and other exporters have been hurt by a stronger yen, which makes their products less competitive abroad and cuts into earnings when profits are brought home.
TOKYO (Reuters) - Japan's Canon Inc, a leading printer and copier maker, said on Friday it would invest 60 billion yen ($575 million) to build a new toner cartridge plant in the United States, prompting its shares to rise as much as 4.4 percent.
The plant in Virginia will buffer the impact of currency fluctuations and rising transport costs on its U.S. business, the company said. Canon and other exporters have been hurt by a stronger yen, which makes their products less competitive abroad and cuts into earnings when profits are brought home.
Canon, which competes with Xerox Corp and Ricoh Co in copiers and printers, said the new factory would have fully automated assembly lines and employ about 700 people. It is expected to start operations as early as December 2009.
Consumable items such as toner and related services are an important source of profit for office equipment makers as they generally fetch high margins and provide a constant revenue stream.
!ADVERTISEMENT!Canon said last November it would spend a total of 140 billion yen to boost its capacity to make toner cartridges in Japan, where the company currently makes most of its products for the global market.
A stronger yen forced Canon, which earns more than three-quarters of its group revenues overseas, to post an 18 percent fall in quarterly operating profit and cut its full-year outlook in April.
Shares in Canon were up 3.4 percent at 5,420 yen as of 0027 yen after rising as high as 5,470 yen earlier. The benchmark Nikkei average was up 1.7 percent.
(Reporting by Sachi Izumi, Editing by Sophie Hardach)
