Nikon has just released their latest financial results, which make for mixed reading and a bumpy road still ahead for them. It's not all bad news, so how will 2021 look for them?
The financial impact of COVID-19 on 2020 will be considered by many an annus horribilis, with the business world severely stunted. For photography manufacturers, it has most certainly caused significant pain, but I'd argue that for Nikon that accolade goes to 2019 when it first truly began implementing its pivot to mirrorless cameras. It's clear that DSLR sales are plunging, with mirrorless selling more units for the first time. Nikon's 2018 move to mirrorless has meant trying to replace DSLR sales with mirrorless sales, but when you don't have anything to go on, releasing a new system and — more importantly — lens lineup is difficult. Nikkei's report on 2019 mirrorless sales suggests that Nikon wasn't nearly as successful as it needed to be. This is backed up by similar results on the domestic front. In short, income from DSLRs continues a long term downward trend, but sales in mirrorless are not making up for the shortfall. There is some serious restructuring going on: closing Chinese factories, shuttering compact camera production, and shifting manufacturing to Thailand. Nikon can't seem to escape from the bottom line — there is not enough money coming in for the costs it is accruing, and the importance of camera sales to the overall business exposes it to significant financial risk.
There are great expectations with every quarterly financial return Nikon files, as they give more insight into how they are performing. The second quarter again showed low sales and income (¥110.9B) along with large losses (¥23.1B). That said, Imaging sales had actually increased by 56% on the previous quarter (¥25B to ¥39B), and most of the hit was taken by impairment losses (asset depreciation), making the Imaging Division largely profit neutral. So, what was the third quarter like?
Revenue increased to ¥150.6B with a surplus of ¥9.9B, which equates to a 36% increase quarter on quarter and remarkably is the same as 2019, all of which goes to show how bad 2019 was for Nikon. The Imaging Division saw revenue increase again to ¥52B and is now profit neutral. This is down from the ¥70B in 2019, perhaps not as low as might have been expected; that drop has largely been made up by better performance from the Precision Equipment Division. Of more interest is how many units they are actually shipping and, of those, what proportion are made up of compact, DSLR, and mirrorless cameras. Sadly, that level of detail is unavailable, and we can only see the ILC/compact split at 280,000 and 80,000 respectively, along with 470,000 lenses. That's compared to 580,000 and 230,000 last year, and 950,000 lenses. Given that the global CIPA shipment data for this same period is running at about 75% of last year, this is not a great performance from Nikon, which seems to have halved sales, bar compact cameras, which have all but ceased. We know that most of Nikon's sales come from DSLRs; however, the key question remains as to the performance of its mirrorless models. Their financial report blithely states "record quarterly sales for mirrorless cameras." However, this is from a very low bar on the back of having more models on the market. The financials show Nikon is heading in the right direction, but it remains to be seen how well its mirrorless models are performing against fierce competition from Canon and Sony.