Nikon Q1 profit leaps; outlook uncertain
Tokyo, August 5, 2010
Japan's Nikon Corp beat expectations with a more than 15-fold rise in quarterly profit on Thursday and raised its half-year profit outlook on strong camera sales and improved demand for its chip and LCD steppers.
But the company left its full-year profit forecast unchanged amid concerns over the strength of the yen and the outlook for the global economy in the second half of the year.
"There are various concerns, such as the direction of the economy," said Executive Vice President Ichiro Terato. "So rather than leap ahead, we thought it better to leave the full year unchanged."
Japan's currency has surged about 9 per cent against the dollar and 11 per cent against the euro since the beginning of April, weighing particularly heavily on profits in the camera division.
April-June operating profit came to 11.3 billion yen ($131 million), soundly beating the average forecast of 6.8 billion in a survey of three analysts by Thomson Reuters.
A year earlier, Nikon eked out a quarterly profit of just 730 million yen as demand slid in the aftermath of the global financial crisis.
A pick-up in demand for steppers and scanners, multi-million dollar machines used to etch circuitry onto silicon wafers and LCD panels, helped shrink the precision equipment division's losses compared to the previous year.
Nikon expects the division to scrape into profit over the financial year, raising its annual sales forecast for new chip steppers and scanners to 54 units from 48 units, and its forecast for LCD steppers and scanners to 62 units from 58.
Its biggest competitor in chip steppers, Netherlands-based ASML, last month raised its full-year sales outlook on robust demand.
Data from research firm Gartner showed in June that spending on semiconductor capital equipment would more than double this year to $35.4 billion, driven by an increase in demand for chips used in smartphones such as the iPhone and tablet computers.
There are concerns that demand may taper off in 2011 due to excess capacity.
The world's third-largest camera maker after Canon Inc and Sony Corp, Nikon trimmed its annual camera profit outlook on exchange rate concerns despite lifting projections for unit sales.
Every one yen rise against the dollar would deal a 700 million yen blow to profits over the remainder of the financial year to March 2011. A rise of one yen against the euro would cut profits by 800 million yen.
The company is assuming rates of 90 yen to the dollar and 110 yen to the euro for the rest of the year, compared with current rates of about 86 yen to the dollar and 113 yen to the euro.
Nikon nudged up its annual sales forecast for the lucrative single-lens reflex camera segment to 4.25 million units.
It also lifted its sales forecast for compact digital cameras to 13.5 million units from 12.5 million.
Competitors' launch of "mirrorless" models, which offer some of the advantages of professional-style single-lens reflex cameras in a lightweight package, is one source of uncertainty over the outlook, Yasuyuki Okamoto, head of the imaging division said. The company has a new product in the works, but executives remained tight-lipped as to what it is or when it will be launched.
Nikon shares closed up 1.5 per cent on the day at 1512 yen ahead of the results. – Reuters