Nikon is Still Not Dead

As I hinted would be the case last month, Nikon today reported better-than-expected results for their first quarter of their 2022 year (which comprises April 1, 2021 to June 30, 2021). The actual numbers will probably be a big surprise to some (though perhaps not to those that were tuned into the whisper numbers in Tokyo).

For instance, last year the Imaging Products business sold 25.1b yen worth of product in the same quarter. This year? 50b yen, a nearly 100% increase. Profit went from -8.3b yen last year to +9.2b yen this year. And if you thought Imaging's recovery was good, Nikon's Precision Equipment business recovery was better (mostly due to sales into China). For the first time I can remember, Nikon had profit in four of their five business groups. Even their nascent healthcare group finally poked its head out of the red.

For the full fiscal year (which ends March 31, 2022), Imaging is now expected to bring in 170b in sales and 12b in profit. That's based on selling 750k ILC units, 1.3m lenses, and 250k compact cameras. My guess is that those forecasts would be higher if supply chain and travel issues weren't still in play. Inventory is at a historic low for Imaging, so any Nikon sales improvements will have to be basically organic, not "stuffing the channel" as they have been at times in the past.

The only anomaly I could find in Nikon's presentation was this: profit in the second half of the year is 20% what they forecast in the first half. That seems to be a clue that Nikon isn't done writing down underperforming assets, as they tend to do that at the end of their fiscal year, if possible. Nikon's forecast numbers don't seem to hint at any significant, new camera models in 2021 other than the Z9 (which isn't a volume product). 

As I've been writing for some time: Nikon is still a financially healthy company. Today more so than last year. 

None of the above changes anything vis-a-vis Nikon's competitive position. Nikon is still #3 in ILC and probably will be for some time (a low volume camera such as the Z9 won't make a big difference to that, even if it's a total winner in its category). The Z system still needs to fill in missing cameras and lenses to be a full lineup. The DSLR market is still going down, and Nikon has to carefully adjust the balance between what they're doing with DSLRs and mirrorless, lest they produce sub-optimal financial results. I suspect Nikon is now leading the DSLR market, at least in some regions, so it's important that they don't ignore that.

In other words, like any business, Nikon has a range of things they need to do to continue to succeed. But sale or closing of the Imaging business isn't one of those. 


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