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Posts Tagged ‘FY2020’

Nikon’s FY2020 financial results: ¥225.8B in revenue, ¥17.1B loss in operating profit for Imaging Products Business

29 May

As it promised when it initially pushed back the release date, Nikon has released the financial results today for its 2020 fiscal year (FY2020), ending March 31, 2020, as well as its forecast for its 2021 fiscal year (FY2021).

Overall, Nikon Corporation recorded ¥591B in revenue and ¥6.7B in operating profit. These numbers align with what Nikon’s updated forecast suspected and are a decrease of ¥117.6B and ¥75.9B, respectively, year-over-year (YOY).

An overview of Nikon’s revenue, operating profit and more for FY2020.

Interestingly, Nikon attempts to quantify the impact of the COVID-19 pandemic, with its report saying it believes the pandemic has caused 10 billion yen in operating profit losses. Specifically, Nikon attributes ‘approximately 4 billion yen’ of that loss to its Imaging Products division ‘Due to product mix change by [the] suspension of distributors mainly selling mid- and high-end cameras, and delay of launch in main products including professional use products by stagnation of the supply chain.’

Diving specifically into its Imaging Products Business, Nikon recorded ¥225.8B in revenue and a loss of ¥17.1B in operating profit. These numbers are both worse than Nikon’s February 2020 forecast and are a decrease of ¥70.3B and ¥39.1B, respectively. The documents reveal Nikon sold 1.62 million interchangeable lens camera (ILC) units and 2.65 million interchangeable lens units, with just 840,000 compact digital cameras sold. These unit numbers are a decrease of 21.4%, 16.4% and 47.5%, respectively, YOY.

Nikon’s breakdown of the FY2020 results for its Imaging Products Business.

In notes on the revenue of its Imaging Products Business, Nikon says revenues were ‘progressing mostly in line with previous forecasts until the middle of February,’ when the COVID-19 started to wreak havoc on the supply chain and retailers. Nikon again reiterates that it’s had to delay new product launches ‘such as high-end DSLR cameras and [mirrorless lenses]’ due to the impact of the COVID-19 pandemic. This is referencing the delay of Nikon D6 shipments and suggests the Nikkor Z 70-200mm F2.8 VR S zoom delay back in January could’ve been due to COVID-19 complications as well, even though at the time Nikon said it was caused by ‘production reasons.’ Nikon also notes sales of its Z-series mirrorless cameras and Z-series lenses have increased, and that the volume/sales ratio of mid-range and high-end cameras ‘improved steadily’ YOY.

Additional comments under the ‘Operating Profit’ headline note Nikon incurred ¥2.7B in restructuring costs and posted ¥6.6B in fixed asset impairment losses, which were detailed in its statement earlier this month.

As for FY2021, Nikon doesn’t share too much information, saying performance forecast details will ‘be disclosed once reasonable estimation can be given as the impact of COVID-19 is uncertain.’ Numbers aside, Nikon notes sales for its imaging Products Business ‘decreased significantly YOY’ in April and May of this year and notes that ‘the business of luxury goods is expected to continue in a severe business environment for the time being, and the deficit for the second consecutive fiscal year is inevitable.’

The executive summary section of the report details how Nikon plans to approach its various divisions in the upcoming year.

Under the executive headline, Nikon says its strategy for the Imaging Products Business is to ‘rebuild business with an understanding of accelerating market shrinkige [and] aim to achieve early profitability.’ In other words, Nikon plans to optimize its Imaging Products Division to get ahead of the quickly-shrinking camera market by restricting and minimizing costs.

You can find all of the latest financial results and presentation materials referenced above on Nikon’s investor relations website.

Articles: Digital Photography Review (dpreview.com)

 
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Nikon says it’s expecting ‘extraordinary losses,’ has updated its FY2020 projections

12 May

Nikon Corporation has issued a statement to investors warning the company ‘expects to post extraordinary losses’ for its 2020 fiscal year (FY2020) that ended on March 31, 2020, and has subsequently made a revision to the financial forecast ahead of the upcoming release of the results on May 28.

If Canon’s latest financial results were anything to go by, it was inevitable Nikon’s were going to look even worse. While we don’t have the exact numbers yet, Nikon has preemptively warned investors that it won’t be pretty. In a document titled ‘Notice Regarding Recognition of Extraordinary Losses and Reversal of Deferred Tax Assets in Non-Consolidated Financial Statements,’ Nikon says the following:

‘Using the future plan that reflects the impact and more caused by the spread of COVID-19 to business activities, the Company has assessed an indication that fixed assets may be impaired, performed valuation of financial assets, and examined the recoverability of deferred tax assets.’

Put more simply, Nikon is saying the global impact of the COVID-19 pandemic has caused much of its business to slow or stop production in its facilities and dramatically reduced sales, leading to a drop in value of its production line and equipment. In turn for reducing the value of these departments, Nikon will be able to reduce its taxable income equal to the amount it’s decreased the value of these divisions. Nikon specifically references its Imaging Product Business, saying it is posting a 5.7 billion yen impairment loss.

A worker pieces together a custom sensor rig for testing in Nikon’s Sendai factory.

In addition to the above notice, Nikon has also published revisions to its projections for the forthcoming FY2020 results. As you might expect, the numbers are down dramatically.

Nikon expects revenue and operating profits to be 591 billion yen and 6 billion yen, respectively, a decrease of 4.7 percent and 70 percent, respectively, compared to Nikon’s previous forecasts. Nikon notes these figures are amplified due to the ‘recognition of impairment losses of 11.1 billion yen’ mentioned above. Nikon specifically notes the 7.5 billion yen in impairment losses for its Imaging Products Business is ‘mainly for property, plant and equipment and intangible assets.’

Summed up, Nikon is expecting much less revenue from its Imaging Products Business and other divisions due to the ongoing COVID-19 pandemic and as a result, it’s devaluing the assets of those divisions to account for the income said divisions won’t be making in an effort to reduce its tax liability. Put even more simply, Nikon is being clever with its accounting to help cushion the financial blow from what is shaping up to be a rough year.

Just how rough remains to be seen, but we’ll know for certain on May 28, when the full results are released.

Notices:

Notice Regarding Recognition of Extraordinary Losses and Reversal of Deferred Tax Assets in Non-Consolidated Financial Statements

NIKON CORPORATION (hereinafter “the Company”) expects to post extraordinary losses and to reverse a part of deferred tax assets in its non-consolidated financial statements, which are prepared in accordance with Japanese GAAP, for the fiscal year ended March 31, 2020.

Using the future plan that reflects the impact and more caused by the spread of COVID-19 to business activities, the Company has assessed an indication that fixed assets may be impaired, performed valuation of financial assets, and examined the recoverability of deferred tax assets.

As a result, the Company has decided to post an impairment loss of 5.7 billion yen for the fixed assets held by Imaging Product Business. And for Nikon Metrology NV, the Company’s consolidated subsidiary, a loss on valuation of the investments in subsidiaries and affiliates and provision for loss on business of subsidiaries and affiliates will be recognized 6.7 billion yen and 9.2 billion yen, respectively. The Company has also decided to reverse a part of deferred tax assets and post deferred tax expenses of 20.6 billion yen. However, the losses associated with the subsidiary mentioned above will have no impact on the consolidated financial results, as those losses will be eliminated in the consolidated financial statements.

Notice Regarding Revision of the Consolidated Financial Forecast for the Fiscal Year Ended March 31, 2020 and Recognition of Impairment Losses

This is to announce that the consolidated financial forecast announced on February 6, 2020 is revised as below, reflecting our recent business performance trend, and to disclose that impairment losses are expected to be recognized.

1. Revision of the Consolidated Financial Forecast
Revised Consolidated Financial Forecast for the Fiscal Year Ended March 31, 2020 (From April 1, 2019 to March 31, 2020)

2. Reason for Revision of the Consolidated Financial Forecast

Decrease in revenue is expected due to factors such as the delay in installations of FPD lithography system, affected by the spread of COVID-19. In addition, operating profit, profit before income taxes and profit attributable to owners of the parent are also expected to be lower than the previous forecast due to the recognition of impairment losses of 11.1 billion yen for non-current assets, as indicated below in “3. The Recognition of Impairment Losses.”

Based on these situations, the consolidated financial forecast announced on February 6, 2020 is revised as above.

3. Recognition of Impairment Losses

For the fiscal year ended March 31, 2020, indication of impairment for non-current assets was examined based on its future utilization and the impact caused by the spread of COVID-19 on business operations. As a result of measuring the recoverable amount of the cash-generating units in which impairment was indicated, a sufficient recoverable amount was not estimated in the Imaging Products Business and the Industrial Metrology Business and Others. Therefore, impairment losses of 11.1 billion yen are to be recognized. In the Imaging Products Business, impairment losses of 7.5 billion yen mainly for property, plant and equipment and intangible assets are to be recognized. In the Industrial Metrology Business and Others, impairment losses of 3.6 billion yen mainly for goodwill, property, plant and equipment and intangible assets are to be recognized.

Articles: Digital Photography Review (dpreview.com)

 
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