Nikon cuts full-year profit target as mirrorless cameras lose their shine

TOKYO Thu Aug 8, 2013 3:42pm IST

A sign hangs in the Nikon booth on the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013. REUTERS/Rick Wilking/Files

A sign hangs in the Nikon booth on the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013.

Credit: Reuters/Rick Wilking/Files

Related Topics

Stocks

   

TOKYO (Reuters) - Nikon Corp(7731.T) cut its full-year profit due to disappointing demand for mirrorless cameras that were once seen as a revolutionary invention that could save the industry from the threat of increasingly advanced smartphone cameras.

Nikon executives said that sales were particularly disappointing in the United States and Europe for mirrorless cameras, which are lighter and cheaper than single-lens reflex (SLR) devices and offer higher image quality than other compact models.

"In Europe and the U.S. the ratio of mirrorless to SLRs hasn't grown at all, unlike in Asia, where it's quite popular with women because it's light. We had higher expectations for other regions," said Yasuyuki Okamoto, president of the imaging company. "But people who like cameras tend to just go for SLRs, even though they're very heavy."

Japanese camera makers were hoping that mirrorless cameras, which work with a sensors, could pick up the slack as compact camera sales continue to slide as consumers are increasingly shifting to high-resolution smartphone cameras.

GRAPHIC: Nikon earnings link.reuters.com/dej32v

But so far, they have only seen strong mirrorless sales at home, where shipments grew 16.8 percent in the six months to June, while dropping 18.5 percent globally, according to data from the Camera and Imaging Products Association (CIPA) of Japan. Compact camera shipments plummeted 48 percent.

Rival Olympus Corp (7731.T) said on Thursday that its sales of its signature mirrorless model, the PEN, had fallen 12 percent in the first quarter, below its expectations.

Okamoto warned that Nikon may have to rethink its product mix in other regions as falling prices for mirrorless cameras are pinching margins and hurting the interchangeable lens division even as SLR sales remained strong. It cut its full-year forecast for the division to 6.55 million units from 7.1 million.

Okamoto said that the ratio of mirrorless cameras to SLRs was still growing in China, but that many consumers still preferred to go for the top-of-the-range cameras.

However, slower growth in China and other emerging economies was seen likely weighing on the company's bottom line for longer than initially anticipated. Nikon says it now hopes for a recovery of the Chinese economy some time next year, against earlier expectations of a pick-up this autumn.

"That would be good if that's how it works out. But (the Chinese economy) could still be bad next year. No one knows. Inventories will probably build up," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment in Tokyo.

Nikon also cut its forecast for steppers, multi-million dollar lithography machines that are a vital part of the semiconductor manufacturing process, to 37 machines from 38 after selling just two in the first quarter compared to six last year.

The Japanese firm now claims less than a fifth of the market, down from less than 40 percent a decade ago, as Dutch rival ASML Holdings NV (ASML.AS) has gained a share of over 80 percent.

Nikon, the world's second-largest camera maker behind Canon Inc (7751.T), booked 6.03 billion yen in operating profit for the first quarter, short of expectations of 9.07 billion yen, the average of seven analysts' estimates according to Thomson Reuters StarMine.

Nikon cut its operating profit forecast to 65 billion yen for the year to next March, down nearly one-quarter from its forecast issued three months ago of 85 billion yen, although this would still be a rise of 27 percent from a year ago.

Shares of Nikon closed down 1.3 percent before the earnings announcement, in line with a 1.6 percent loss for the benchmark Nikkei average. The shares, which have swung wildly after the last two quarterly earnings reports, are up a relatively modest 12 percent since mid-November, when hopes for Prime Minister Shinzo Abe's reflationary policies sparked a stock market rally. The Nikkei average has risen 57 percent over the same period. (Reporting by Sophie Knight; Editing by Matt Driskill and Edmund Klamann)

FILED UNDER:

Sony Cyber Attack

REUTERS SHOWCASE

Exit Polls

Exit Polls

BJP unlikely to form Jammu & Kashmir govt - polls.  Full Article 

Forceful Conversions

Forceful Conversions

BJP distances itself from religious conversions.  Full Article 

Photo

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Economic Pulse

Economic Pulse

Crank up public spending to revive growth - chief economic adviser.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

Down Under

Down Under

Magic Johnson inspires Australia to second test win.  Full Article 

Going International

Going International

Bollywood’s Priyanka Chopra sets sights on American TV.  Full Article 

India This Week

India This Week

Some of our best photos from this week.   Full Coverage 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device   Full Coverage