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March 30, 2006

Nikon Sees 70 Percent Climb In Profit

Nikon remains bullish on profit projections after senior officers revealed the latest three-year operating plan.

Most notable is the projection on profits rising from 53B Yen to 90B Yen (USD764M), an increase of about 70 percent over the course of the fiscal year. That projection will be driven by digital SLR camera sales, which represents over half of the company's current profit portfolio. The outlook also remains optimistic on the sales of stepper tools and other chip-making equipment.

Nikon President Michio Kariya was also quite confident of the company's performance despite the entry of Sony and other electronic consumer firms into the DSLR fray, stating "We will leverage to the maximum the know-how accumulated during our more than 50 years in the camera business." Nikon trails only Canon in the heavily contested market.

The plan's success also banks upon slightly higher sales of stepper and chip-making devices. Compared to the calculated increase of 2.7M units of DSLRs (up from 1.7M), Nikon expects to sell 165 stepper units, up from last year's goal of 160. Yet stepper machines make up approximately 45 percent of the company's profit table.

Kariya also promised to reduce Nikon's debt, currently at 195M Yen, equal to shareholder equity. No details were forthcoming, but the debt would be eased by cash flow, not asset sales. Kariya also indicated he would consider acquisition of firms that would complement the maker's overall strategies.

Clearly part of that strategy is to cut costs and find more efficient means of producing quality items. This may include silent outsourcing of components or even whole products. As noted in Digitimes, Taiwan outsourcing manufacturer Asia Optical has reputedly taken orders from both Nikon and Fujifilm. No details are forthcoming on the order, but Asia Optical has stated that they will avoid orders for low-end or low-priced models so as to prevent being caught in the margins of the price wars that categorize the entry-level digicam market.

Posted by covey22 at March 30, 2006 6:16 PM