Nikon Corporation's

present financial position

As second most important player in the world of photography Nikon Corporation is confronted with serious problems. Earlier this century Nikon went into the red. With the introduction of an interesting series of digital cameras and lenses Nikon was saved by the bell. Luckily Nikon became a ‘paying concern’. But not for long as competitors were not sitting still and consumers preferences were unpredictable. Mobile phones and (later) tablets were fitted with cameras and lenses equalling many compact digital cameras in performance. In 2004 a Consumer Relation Management was unrolled to follow market trends. Unfortunately the latter effort was not yielding as expected.
The overall imaging business went down by 30%, while the sales of Coolpix cameras even went down by over 50 %*. Not only by changing markets but also by the before mentioned disasters, causing delays in supply and production. Luckily the exchange rates of the Yen versus USDollar and Euro were (a bit) profitable.


In May 2015 a 3-year management plan was introduced, but Nikon stated in its November 2016 financial results data that Nikon ‘misread market trend’ and that it ‘acknowledge the issues of current targets and will discontinue the existing medium-term management plan’. In its new restructuring plan Nikon is striving for break-even on Lithography and Imaging Products business and it is developing the Microscope Solution, Industrial Metrology and Medical Business. To achieve this, serious changes in Nikon’s management and production units have been taken. Some 1143 persons solicitated for voluntary retirement. The last quarter of the fiscal year ending March 31, 2017 has been a tough one, due to one-time restructuring costs of nearly 53 billion Yen. By the end of March 2017 financial data published by Nikon Corporation show that the precision equipment business was profitable, where the imaging business went down by 26.4 % and the operating income decreased by a hefty 39.4 %. In its 2018 financial report Nikon stated that 'despite market shrinkage fixed cost reduction and focus on high-value-added products profit increased by 13.1 %'. Nikon's forecast for 2019 will see a 'decrease due to continiuous market shrinkage and impact of foreign exchange loss'. Cost reduction was achieved by closing overseas (China) production units and serious management reorganization. In its February 2019 financial report Nikon stated that "with the anouncement of ML cameras more customers than expected refrained from purchasing existing products. Units sold, revenue and H1 profit missed plan". Would it be of help to anounce new products when they are ready for shipment? Many newly anounced/introduced products are not available for many months! In its presentation of the financial data of the year ending by March 31, 2019 Nikon stated that "camera market continues to shrink" and "sales volume reduction is expected in each category". Unfortunately Nikon had to repeat this sad statement again in August 2019.

Nikon has 'misread the market' (stated in an earlier financial report), documented by the Nikon 1-Series, Keymission, DL-Series and Nikon NF-300i frame (just to mention a few recent 'poor shots'). The production of melagomaniac products like the Zoom-Nikkor 1200-1700mm and the recent Nikkor-Z 58mm/0.95, absorbing millions of Yen, manpower and production facilities, may improve the company's image, but will not serve balance sheet figures.

In its new 2019 management plan Nikon promises to "ímprove profitability and enhance management DNA" by "trustworthiness and creativity" with a slogan: Unlock the future with the power of light! Unfortunately nowhere an open and transparent consumer relation or communication is mentioned. Nikon should open its HQ and talk with customers.

*November 2016 financial data.

Production of Nikon cameras and lenses (10,000 units)

                   

Camera/lens

2012 2013 2014 2015 2016 2017 2018 2019 2020#

D-CIL* - world

1,633

1,923

1,678

1,357

1,304

1,177

1,141 1,004

850

Nikon

474

698

575

461

404

310

262 206

150

 

 

 

 

 

 

   

 

IL** - world

2,641

2,964

2,628

2,200

2,134

1,920

1,906 1,696

1,450

Nikon

713

971

823

668

590

462

401 317

250

 

 

 

 

 

 

   

 

C-DSC*** - world

9,933

6,808

4,118

2,803

2,079

1,260

1,196 822

600

Nikon

1,737

1,714

1,116

769

623

319

251 160

90

                   

* = Digital Cameras with Interchangeable Lenses - ** Interchangeable Lenses - *** Compact Digital Still Cameras - # forecast

(Source: Nikon 2019/May & August presentation material & November 2019 revised forcast)

BTW: To compare these financial data with the financial data of Nikon's most important rival Canon is difficult, since Canon's Imaging System Business Unit includes cameras and lenses but also cinema cameras, printers, scanners, projectors and calculators. In Canon's financial data as per March 31, 2019 sales (first half of 2019) in the ISB-Unit went down by 17.8 % (compared with 1st half 2018). Total net sales went down 10 % and net income per share went down 50 % !!. 25 % of its sales revenues comes from the camera business, while Nikon's imaging business is counting for 42 % of its total sales. 76 % of Canon's camera sales is made on markets outside Japan, while Nikon sells 87 % outside Japan. Canon also forcasts a decline in camera sales for the coming two years.

(Source: Canon 2019/July presentation material)

The second strongest competitor, Sony, is facing problems in the camera market, too. In the 3 months ended June 30, 2019 sales and operating revenue in the still and video cameras (inl. for broadcast) section went down some 10 % compared to the same period in 2018. Sales and revenues are made roughly for 1/3 in Japan and 2/3 outside Japan.

(Source: Sony 2019/June presentation material)