Wednesday, March 13, 2013
Nikon To Slash Camera Business Inventory 20%
TOKYO (Nikkei)--Nikon Corp. (7731) plans to reduce inventory in its camera business at the end of fiscal 2012 by 20% from December levels through re-examining its marketing strategy and streamlining production.
The company aims to speed up production by re-evaluating manufacturing processes and automating machinery to reduce goods in process. As a result, Nikon will cut inventory turnover from 50 days at the end of December to 45 days at the end of March.
Nikon's inventory totaled about 297 billion yen on a group basis at the end of December. The camera business is thought to account for more than 110 billion yen, or about 40%, of this.
Inventory at the end of March looks to drop about 20 billion yen from the end of last year, based on the firm's assumed exchange rates of 85 yen to the dollar and 115 yen to the euro.
If the current rates of 96 yen to the dollar and 125 yen to the euro persist, inventory in Nikon's overseas camera business will swell in yen terms but be at appropriate levels in unit terms if all goes according to plan. By reducing inventory of models whose prices have been declining, the company aims to strengthen sales of high-priced new models from April.
The sluggish European and Chinese economies kept sales of low-cost SLR (single-lens reflex) cameras from meeting expectations for the October-December quarter. Nikon has thus lowered its projection of fiscal 2012 consolidated operating profit by 24 billion yen from the forecast made in November to 48 billion yen -- down 40% on the year.
Inventory reduction efforts and yen weakness are seen improving profitability in fiscal 2013. Operating profit in Nikon's camera business is projected to increase 11% to 60 billion yen this fiscal year and could log double-digit growth next fiscal year, with the operating profit margin possibly rising from slightly above 8% to the 10% range.
(The Nikkei, March 13 morning edition)