Nikon's Fiscal Year Results

Nikon made their fiscal year financial presentation in Tokyo today, and the numbers were pretty much what's been expected for some time now (due to Nikon's earlier statements about restructuring costs). I won't bore you with all the details. Here are the top highlights:

  • Due to the write-downs and restructuring costs, the company lost money and the Imaging Group lost money. 
  • Nikon's negative cash flow issue will now end, and the equity ratio has already improved (it was already very good).
  • The Imaging Group loss was less than forecast due to better-than-forecast sales in the last two quarters.
  • ILC market share was 15.2% (850k units). Lens market share was 14.8% (1.35m units).
  • Z6 II and Z7 II sales were strong, and they can't build to demand yet.

The forecast for the current fiscal year (April 1, 2021 to March 30, 2022) had these highlights:

  • Company and Imaging Group both will make a profit. Actually, Nikon is forecasting a profit in all 5 of its groups.
  • The Imaging Group profit will be modest, but sales are expected to be up 10% (mostly through a better first half of fiscal year).
  • ILC market share is forecast at 12.9% (750k units). Lens market share forecast at 13.4% (1.3m units). The all-vendors ILC unit volume is expected to be 5% higher (Canon estimated 10%). 
  • Additional cost reductions forecast of 11b yen in the fiscal year for Imaging, which will bring the planned cost reductions to an end.

The most interesting line in the presentation (for photographers) was: "Enhance customer satisfaction and the quality of sales by launching flagship bodies, expanding our lineup of distinctive lenses and providing applications that enable new ways of expression through images." Bodies, as in plural. Applications, as in software.

Two other interesting points (1) was a clear reduction of available Imaging Group inventory during the year (it had risen to a peak in fiscal 2019 and has been coming down since); and (2) China is surpassing the US as the largest regional sales outlet. Meanwhile, for those on the Internet that believe Nikon isn't investing in R&D in Imaging because of all the losses, R&D is expected to be 16b yen (down from 16.9b yen), and still at about 10% of revenue, which is above their historical average. 

So: nothing particularly new to report, as Nikon had already front-loaded all the bad news into earlier announcements. 

I suppose the thing that will get the most discussion is market share. Historically, the top three ILC market share positions have generally been +/-5 points centered on 45%, 30%, 15% (which totals 85-95% of the total market). In the DSLR era, that was Canon, Nikon, and Sony, in that order. Now that we're in the mirrorless era, the new order would be Canon, Sony, and then Nikon, pretty much in the same ranges. So Nikon and Sony have switched places. Canon is pursuing a market share strategy, trying to keep as close to 50% market share as is possible. Nikon is pursuing a profitability strategy, being satisfied (for the time being) with third place. Sony's strategy seems to straddle the two goals, both wanting more market share and more profit. 

Now that the bad news is out of the way, I expect Nikon to announce new mirrorless products soon. As noted before, that would likely be the Z30 and more Z lenses. But maybe it's a different body (the Z30 definitely wouldn't be a "flagship body.") Of course, the supply chain and pandemic disruptions are still ongoing, so the camera companies are all struggling to get their new products to market in sufficient quantity. 

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