Fujifilm dives 9 pct after slashing profit outlook

TOKYO, Aug 29 (Reuters) - Shares in Japan's Fujifilm Holdings (4901.T: Quote, Profile, Research, Stock Buzz) plunged 9.5 percent, on track for their biggest one-day percentage loss in nearly a decade, after the company slashed its profit forecast by almost a quarter.

The company has been hit by higher raw material costs, sluggish sales of photofilm and a sharp price fall for digital cameras. It also said it would book additional restructuring costs.

UBS Securities cut its rating on the company to "neutral" from "buy" and its target price to 3,500 yen from 4,200 yen. Other brokerages also cut their target prices.

"With the economy in such bad shape, Fuji is likely to face tough times ahead, especially given its dependence on the European market, where currency rates have affected it as well," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"Further restructuring is a separate issue and may not help. They may just have to wait for the economy to improve."

Fujifilm now expects its operating profit to be 160 billion yen ($1.5 billion) in the year ending March 2009, some 24 percent below its earlier forecast and a Reuters consensus estimate.

Its stock tumbled 9.5 percent to 3,130 yen by midday, heading for its biggest one day loss since early 1999. At one point it fell 13 percent.

Fujifilm was the world's eighth-largest digital camera maker in 2007, according to research firm IDC. It competes with Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) and Olympus Corp (7733.T: Quote, Profile, Research, Stock Buzz) in digital cameras and with Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) and Ricoh Co Ltd (7752.T: Quote, Profile, Research, Stock Buzz) in office equipment. (Reporting by Elaine Lies; Editing by Edwina Gibbs)