Nikon Just Released Some Terrible Financial Results

Nikon Just Released Some Terrible Financial Results

Nikon has just published its figures for the first half of the 2019 financial year and it’s looking bleak for the Japanese manufacturer.

The company as a whole has reported year-on-year figures that don’t make for pleasant reading for shareholders: revenue is down 13.3% and operating profit has fallen by 42.9%. Profit before income taxes is down by 40.6%.

Nikon is a huge company and readers will be most interested in the performance of its Imaging Products Business. Although there were some reasons to be optimistic — sales of high-end cameras has increased  — year-on-year revenue fell by 21.1% with profits down by 84.7%. As detailed in the report, “Unit sales of full-frame cameras increased mainly in Europe and US” thanks to mirrorless cameras, but a collapse in sales in Asia of DSLRs has had a big impact on revenue and profits.

The company has revised down its forecasts for imaging for the year ending March 31, 2020, acknowledging that it overestimated both the size and its share of the market, and that the “ Shift toward ML cameras and the product mix change in the full-frame category have not been accelerated as expected.” The report doesn’t seem to pull any punches, saying that sales plan for mirrorless cameras was “overestimated,” and the company more broadly suffered from “slow execution on drawn out decision making.”

Also included are plans on how to address the decline. Nikon will “Intensify focus on professional and hobbyist segment” as well as expanding the lens lineup, but perhaps the most significant proposed changes are a restructuring of the Imagine Business Unit and a plan to “Drastically revise the sales strategy.” These are influential as it could see a change in how the slow-moving, cautious, and traditional company approaches the industry, particularly in how it markets its products. 

Within all of these figures, it becomes trickier to understand how the NIKKOR Z 58mm f/0.95 S Noct has come to market. As a halo product, it’s impressive (and in demand, apparently!), but until Nikon broadens its lens lineup for its mirrorless cameras, it seems unlikely to create the sense of prestige around the brand that Nikon is seeking. It seems a bit pointless to demonstrate the ability to create some of the best glass in the world when there’s a significant lack of fast lenses available for professionals.

What are your thoughts? Leave a comment below.

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79 Comments

Wes Perry's picture

I’m a little unclear on what they mean by intensifying focus on professional and hobbiest markets...what else is there? The only other category I can think of is maybe “Enthusiast”? I’m not trying to be sarcastic, just trying to sort out what they’re planning on focusing on (or focusing Away from).

Sridhar Chilimuri's picture

Isn't that what they teach in business schools? If you cannot clearly define your focus or market you lose. I think you are spot on in your assessment.

I kind of see "hobbyist" and "enthusiast" as basically the same. You're right...what else is there?

Perhaps they mean the casual customer that buys a camera to have at birthday parties and sports events for their kids. They aren't in to photography like a hobbyist would be, they just want a camera for the family.

Other than hobby and pro they have industrial, medical and other imaging customers

Ahhh yes, the hobbyist medical practitioner! ;)

Matt Williams's picture

I don't know exactly either. Maybe dropping some of their consumer point and shoots? I'm not sure where the line is between "hobbyist" and just a regular consumer. Maybe less focus on their D3xxx line and more on higher-end DSLRs and mirrorless? I'm not sure either.

Marcus Joyce's picture

Nikon makes and maintains the etching harddrive heads for Seagate that's not going anywhere soon..

Marcus Joyce's picture

What I mean is they are apart of the industrial processes where they etch the silicone wafer. I'd say these machines still make a lot of money per unit. But not a volume process.

I seen these machines in Seagate Derry where they use them to make the harddrive heads. Layers of chemicals thick .04 and thin .02 microns layers.

Andrew Morse's picture

I think they mean focusing on potential buyers for higher-end products - people that are willing to pay more than entry level prices. I think a large proportion of sales has traditionally come from entry level DSLRs in the past and that trend may be changing. I'd expect more of a focus on full frame cameras and less investment on the bottom end of the market.

I remember when Nikon had an endless number of Coolpix cameras, probably lost that market to iphones.

Yeah, that seems like a safe bet. Phones are demolishing the casual needs for a dedicated camera.

Jade Scar's picture

"professional" spends lots of money on gear for paying clients

"hobbiest" Spends the same amount of money on gear to take photos of his kids and on vacation.

Rick Nash's picture

Its their way of saying the market is limited and they need to get more of the shrinking market.

Although sales numbers are dismal (as is the case for every manufacturer in the camera industry) I have admired the majority of Nikon’s moves leading into the mirrorless era. I love my D5 and have enjoyed using the Z7, and I’m happy I can use my old lenses. All of my colleagues using Canon are frustrated with their new offerings and are now considering Sony cameras. Interesting times.

Matt Williams's picture

Agreed. I love what Nikon did with the Z series and I love the lenses they've released so far. I don't care that there aren't any f/1.4 or 1.2 lenses, as if that's somehow what defines "professional."

Also, EVERYONE has experienced declining sales and profits from what I can recall from recent reports. Canon and Sony were also both down.

It's not like Nikon is the only one that dipped.

Frederic Hore's picture

A fellow friend and tog - Christopher Dodds Photography, who was a Canon ambassador and big user of their product, dumped them and went with the full Sony line. He loves the high shutter burst speeds for his nature imagery, and not having to fine tune the sensor on his tellys like he had to do with his former DSLR.

For an upgrade in camera bodies last year, I compared the D850 to the Z7, and decided to purchase the D850 - the price was better, and there were more features that worked for me in the type of imagery I was doing. Plus having to buy an adapter for the Z7 to use my existing extensive lens lineup was a non-starter.

Like others have mentioned here, the iPhone and other recent model smartphones, has decimated the low end DSLR & mirrorless market for casual and amateur picture takers. I have an iPhone 7plus, and marvel at the 4k video performance I can achieve using Filmic Pro, with features not available on my Nikon DSLR's. Should be interesting to see what new rabbits Nikon can pull out of its hat.

Cheers!
Frederic in Montréal.

Rob Mitchell's picture

I guess I'd better sell up and buy whatever is most popular and profitable brand then.

Jared Wolfe's picture

I thought your portfolio looked great Rob until I realized how unprofitable your camera brand is. Better get cracking a new portfolio with a profitable camera brand ASAP. /s

Profitable brands charge your photos for success. I photographed one client with OTHER BRAND camera and they went bankrupt. All clients I photograph with profitable brand camera are flourishing.

Will Murray's picture

I was just thinking about Nikon after reading the Olympus rumour. The Z system was a roll of the dice.

dale clark's picture

Nikon has been around for ages. Nikon will make the adjustments needed like they have with every market shift prior. I think the P&S market is really taken a hit due to phone camera quality for all brands.

Matt Williams's picture

Agreed. I think their P&S market will probably go (and it really should). They don't really make any great P&S cameras (the Coolpix A was the last one that was good and it was overpriced compared to the Ricoh GR).

Probably. On the other hand, I'm sure people said the same thing about Kodak.

Benoit Pigeon's picture

Should I worry, should I panic or should I not even care. The later, that's what I'll do. I don't have stock in this industry and I don't need new lenses all the time. No need to cry for big corporations that won't go away any time soon.

Like I've said before, dump the entry-level and focus on the pro and enthusiasts. Nikon, Canon etc should look into either making smartphones with a more photocentric spin or license/partner with one of the smartphone manufacturers for entry-level and, steer them up into their respective systems. Entry-level dedicated cameras both DSLR and mirror less and dead if not rapidly dying

I'd be fascinated to see a tie-up between Samsung and Nikon. Samsung could bring the user interface design skills that come from being in the phone market and Nikon could bring the optics.

Me too. I think these companies are missing the point by not seeing what's pretty much obvious. Partner up with these smartphone makers or release one of their own and use that as a entry-level gateway into their systems. This is where photography is starting for a lot of people and growing.

Nikon Z 70-200 f2.8? Bueller?

Dana Goldstein's picture

They waited too long and underdelivered.

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