Nikon announced their year-end financial results, and they're interesting in a number of ways. Obviously, the global recession has caused a great deal of stress for all companies, but Nikon's report reveals some very interesting things about how Nikon approached the problem.
First, inventory is down to its lowest year-end level in several years. Nikon apparently started making big production cuts late last year, and made a further cut this past quarter. But the interesting thing is that they probably cut too far. Demand has been higher than their estimates. By the end of March they sold more Coolpix (by 330k units) than they expected as recently as early February. They sold more DSLRs (by 120k units). (Nikon had a market share of 37.5%, by the way.) And they sold a remarkable 4.87 million lenses through the year (270k more than expected as late as February).
Of course, all is not perfect. While these late sales pushed year-to-year Imaging sales above last year's numbers (596b yen versus 586b yen), year-to-year profit declined 52%. As much as everyone is complaining about Nikon's price increases, the bottom line is the bottom line: Nikon is feeling profit pain. More demand than expected and less profit than before are one reason why D300's are in tight supply and the rebate on them was removed, I suspect.
Curiously, Nikon seems to have taken a plain vanilla strategy for the coming year. This is the first time I can remember where they have adapted a "just do the same" type of attitude. Their official line is "target the same level of sales units as previous term." Such an approach will likely once again lower overall sales and profit for the division. But it seems clear that Nikon is reluctant to turn the factories back up or make any waves with some unexpected product. They don't seem to be looking to buy market share. They don't want to lose market share. The estimates for the coming year all look like the results for the past year (3.4m DSLRs in coming year versus 3.42m sold in past year, for example). It does seem that Nikon must have some new products in the DSLR and lens lines for the coming six months, because of the way they broke out the half-year estimates. For Coolpix, we clearly see a Christmas back-loading, by comparison. Either Nikon thinks that DSLR sales are flat through the year, or they have another product in the pipeline that'll produce decent volumes in coming six months (D400 or D700x anyone?).
Some other interesting bits: Japan in-market sales for imaging products have been dropping as a percentage of their overall volume. Nikon is predicting a new low of 13% sold to the Japan market in the coming year (in the past that has been as high as 20% of cameras sold, and was 15% last year). It appears that Nikon is targeting the other Asian countries for imaging products in the coming year, as that region is projected to grow from 18% of their sales this year to 22% next. Look out Nikon India. All other regions are down in the projections.
R&D expenditures seem to still have a high priority, despite the fact that Nikon went to a negative cash flow position this past year (debt and bonds increased, too). Thus, you wouldn't be surprised to see that "cut fixed costs" is one of their big goals for the year. That includes "global restructuring of business locations" and "cut...advertising expense." Some of the problem is, of course, the Precision Equipment division, which makes steppers. There, the prognosis for the coming year looks fairly grim, and that's driving what the rest of the company can do now.
Still, the bottom line is this: Nikon pulled in the reins in time. There's nothing in their figures that indicates that they're in trouble, at least as long as the sales environment doesn't deteriorate much more than it has. Don't expect high demand items to be plentiful--production and inventories are being kept restrained. Don't expect any huge fire sale--Nikon is trying to preserve a modest profit in the Imaging division. We may see some sales on items where inventory isn't getting reduced, but that's about it, I think.
When I get a better translation of the Tokyo presentations Nikon made, I may have more to say, but for now the headline says it all: sales down, but Nikon isn't in any real trouble at the moment and hasn't lost market share.