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.

Andy Day's picture

Andy Day is a British photographer and writer living in France. He began photographing parkour in 2003 and has been doing weird things in the city and elsewhere ever since. He's addicted to climbing and owns a fairly useless dog. He has an MA in Sociology & Photography which often makes him ponder what all of this really means.

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The Sony making Nikon sensors argument is overblown by Sony fanboys. LG makes Sony’s OLED TV Panels, yet when under a microscope they both use totally different designs. In other words, LG is better set up to make the panels so Sony designs and contracts out the production, like how TSMC makes the chips for AMD and Apple does similar.

Nikon’s biggest problem is they over-promised and under-deliver with the Z camera. The “it’s a first-generation camera” is not an excuse, they already have experience with MILC, remember their blunder with the 1 Series.

It seems to be a company with huge issues, they have vastly overestimated the mirrorless market and in other areas where there is real consumer demand for their products they can’t meet them case in point;

“Since its release in August 2018, the Nikon AF-S Nikkor 500mm F5.6 PF ED VR lens has been perpetually out of stock..(” Dp review) I am still trying to buy one of these lens a year and half later and the dealers here have no idea when they are going to arrive? A year and half later and they cannot still estimate when they will arrive in stores?

Does that make any sense at all in how to run a company? It makes me second guess whether I want to purchase a new body from them or should I just switch now while there are still fans of their brand before it is too late. I like them and have thousands of dollars invested in Nikon kit but profits down 85% sounds like Sears, or Blockbuster to me not a vibrant camera brand.

Budgets would be my guess and thinking from the company's perspective you can't just ramp up production in a day. Glass takes time to produce and these lenses are specially engineered and assembled. Think about the individual tooling required to make these products. The training and wages for people capable of assembling precision devices consistently. Nikon can only have so many engineers and must allocate them where they deem necessary. If they have 30 senior technicians to make the special lenses then output is static and to increase volume would mean more staff at cost. If adding 10 more senior technicians is a cost of $1m per year would that cost be justified to meet that demand? What if that demand then subsides in a year? Just fire them or keep that $1m operating expense and have to find something else for them to do?

Another thing to consider is the shift to mirrorless has companies like SONY (which I shoot) treating cameras like phones. You now have an updated body every two years or so vs the 4-5 years for the traditional DSLRs, etc.

Nikon and Canon did similar release cycles for their enthusiast cameras, plus overlapping not terribly different models (e.g. D600, D610, D700, D750, D800, D810, D850). The 4 to 5 year cycle is for top tier pro cameras, and Sony did the same thing with the A900, A99, A99II. It's only with the A9 and A9II that they've broken that pattern, and, being the first pro Sony mirrorless, that's not surprising. The Nikon D1H came out just a few months after the D1.

For the enthusiast cameras, though, like the A7III, you're right, but this only works because Sony is still leading this area, so they can make a compelling A7, and a compelling upgrade to it in the A7II, and even still into the A7III. It's a curve that eventually flattens, though. And the A7III actually came out about three and a half years after the A7II.

Being an avid Nikonist since 2004 I was anticipating every Dxxx, most of which I bought and used extensively. In my opinion the last massive improvement was the the D800 and since then improvements where very incremental. I waited so much for the z7 only to discover that it doesn't feel Nikon anymore. The menu is the same but handling is weird and cumbersome and overall its less responsive. And the Snapbridge is a fail. I had an opportunity to shoot an S1R over a weekend and suddenly felt this is the mirrorless Nikon I waited for!

I'm not sure what the profit margin is on cameras and lenses, but when there's a dip in sales like this you have to start asking yourself if you're charging too much for your product.

Sure, pros can justify the cost of anything, but the entry-level and enthusiast market is all based on price vs. features and those are the people you have to convince to switch from their phone to a camera. The phone market is what is killing you.

You have a whole generation of people that their first camera is their phone, that's who you have to market to.

D3XXX and D5XXX lines should be toast, as well as this doomed 50Z ML line. If they got rid of those and put all their efforts into their high-end market, their imaging department may survive. I'm a professional, and I just entered the ML Nikon arena with the Z7, and it's one helluva camera.

I disagree. I think you'll find that a lot of shooters have a soft spot in their heart for (and have bought subsequent cameras from) the brand that first got them into photography. The entry level cameras attract new young customers. You can only sell so many new cameras to established users, and attracting users from other systems is even harder. Entry level is an important way of continuing to feed sales.

Why don't Nikon et al incorporate computational into their DSLRs and mirrorless (and make those cameras smaller).

Nikon has been shooting themselves in the foot for years. I like that they are entering the ML game but don't expect me to sell my 2 dslrs and 8 lenses for a system that hasn't been proved yet. If I do Fujifilm is far superior. I really don't understand why in the world they didn't make the APS-C size ML with the df mount. I would have bought it right away! Yes, I'd have to apply crop factor to all my lenses but who cares. I would have enjoyed the best of both worlds. My mirrorless, my dslr and my lenses:) Instead they are selling me an $8k lens that nobody gives a pretzel about. Where is the D750 replacement?

"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."

And herein lies the problem. Being a slow-moving company in today's rapidly changing world is problematic. This is apparent in that they finally came out with a line of first gen mirrorless cameras to compete in a world full of third gen competitors.

There is not a single comment which may be mistaken for musings of an economist.

Nikon is more vulnerable to this downturn, as they also rely more on the Imaging Division to carry the rest of the company than their competitors. so, ya, perhaps you should care. JMO.

Who knows what they are going to do. But I would condence my offerings into what is profitable . One has to realize the true "profession " share hovers around 1% of the market share. Not a money maker. But as a ploy adding a 3¢ professional decal to an item allows for mark up and advertising . So I figure a realignment along consumer best sellers and a slow down of higher end products. Just like it was in my Jurassic days. Newer "consumer " models with the lastest wonders while "pro" models have a longer run with older proven technology. If it is making you money, and you are using it at your photo job, its professional. Regardless of what a decal states.

“Drastically revise the sales strategy.”

perhaps it's time Nikon offered a "build-your-own" camera. 2~4 chassis options, a high performance package, a media slot option, 'full-spectrum' or 'visible spectrum' filtration, a 'high or low' MP sensor, 'IBIS' or not, et al. this approach might give both Nikon and it's customers the option to recalibrate product in a splintered marketplace. on a 'buyers budget' or 'performance requirements'. right now it's not much more than a 'take it or leave it' roll of the dice.

Nikon's 'marketing plan' has been to push out 'median level' product in boxes restricted to 'specified regions' around the globe. this approach isn't progressive enough for new buyers, or upgraders. a 'build-your-own'' sales strategy based on 'best in class' and 'compatible components', perhaps 'user upgradeable components', would go a long way to building back some trust, prestige, and rapidly adapting to the changing marketplace.

c'mon Nikon — listen to your customers. you can do it. JMO.

Interesting... after nearly 45 years of Nikon I've just started to build a Sony system. Why? I think Sony has the advantage in their E mount lens infrastructure, there are just more native E mount lenses available. After buying an Sony APS camera, an a6000, a couple of years ago I was quite impressed with the results. This was especially noticeable with some of my better Nikon glass via an adapter. But the ergonomics were and remain inferior to Nikon, even with the a7R III I recently purchased. However, the reason I bought the a7R III over a Z7 was the availability of lenses. One way or another, an adapter was going to be necessary during the transition. And Sony seems to be much more interested in advancing their cameras more aggressively. I think Nikon was caught up in the "we're Nikon" mentality much like the "we're Kodak" that brought the once giant company to it's knees. I think Nikon will catch up if they get more aggressive with their updates, Z7 II, more native mount glass, etc. I also believe they need to regain their focus, they are a high end camera company, stop trying to be all things to all people. Perhaps they should enter medium format if they want to keep professional photographers on board. I still prefer the feel and familiarity of my Nikon cameras. Time will tell...

the real reason they "stopped" pre-orders for the 58mm lol

It's fascinating how Sony almost single-handedly flipped over the photography market. When they started making Mirrorless cameras nobody took them seriously. And now everyone are trying to catch up on them. While Sony are eating (mostly) Nikon and (a little bit of) Canon market share.
That is not about photogarphy per se - just great management choices.

I work at a local camera shop that has been trying to become a dealer for Nikon for over 2 years now. They give us the run-around, never reply to emails and are making it painstakingly hard to sell their product to consumers. It doesn't surprise me that they are struggling. I also hear horror stories about how they treat their NPS members.

I see from your profile you are in Denver. No doubt there are Nikon dealers in your city. The company probably has no intention of your local store encroaching on the market or market share of other dealers. Car companies do the same thing...

This situation was inevitable it has happened many times since the birth of the camera, every new format was produced to kick start sales again. Mirrorless cameras are just another effort to get the market buzzing again but at the massive prices they cost it is only for the few not the masses. No doubt the new Sigma camera will hurt the big company's.

What these older camera companies have to understand is that people want convenience over quality and most of them that bought cameras in the digital boom in the 90s are shifting to cellphone cameras. Camera brands totally failed to understand peoples focus nowadays and didnt innovate enough and cellphone software, social sharing and AI tech bursted into the scene overtaking the quality space through convenience. So Canon and Nikon and all the other brands have to include all of the convenience of the cellphone industry and then MORE. Because you have to be ahead of your competition. This is also happening to a degree with the godox lighting system, overcoming other brands by convenience, price cuts and tech upgrade...

the market is affected by the competitors not by the brand itself . add a one more competition inside the brand itself about the category , ML or DSLR . there is very strong situation here it has been a tool in the hand of the politicians in social orientation since a century and it MATTERS ; that is the importance of the early education to build the future ours. so from this specific point we can view the early history of the ML as it came in different ways in Panasonic and Sony, making big advantage from a serious disadvantage , that is: both brands has no history in DLSR which liberated their hands in creating a whole new strong world. people who got introduced to the medium of the Dl are most they grow up there. and this matters .. in the science of the behaviorism it matters.... and in the engineering world the the two brands were building up their arsenal and market. Add Fuji which came with very distinguished approach in the areas they chose to serve and with very strong accent in the design . Nikon came from the start with the poorest marketing approach laying questions such oh are we Dslr or Dl ? oh can this out perform that ..oh..... what the fuck is this nagging for ? what a negativity ? and when they started the line they flanked it from the middle or looking so and took an advantage point for the marketing that is totally a mess. they started from the same nagging zone can ML do the DLSR job ? why is this ??? why is this? there are lot lot of imaging zones that are worth investing in as a fresh start : photography is art not only wedding... so if the marketing team focused on that field .. this would have created a glorious start with out the feeling of competition . now we got nikon trapped in the place where every dog is biting.... they focuson the view finder !!!!!!!! for god sake you have the damn screen in the back that is your focus now and for the next few years... you need to teach people to detach from the camera physically. not kill yourself to say you can still use it like a slow DLSR !!!!! Nikon need to talk with their marketing people ...

I’ve been saying this for years it’s all about convenience, I can take a photo on my iPhone and instantly send it to the internet, with a dslr it’s a far more clunky affair, why DSLR manufacturers haven’t included the android operating system within the cameras totally mystifies me. Imagine a dslr with the capability to edit in Lightroom in body then send to the internet, it surely cannot be that difficult can it?

If you care that little about photography then stick to your apple device with the fake bokeh and Instagram filters. Anyone that really cared would want to shoot in raw, look at the images on a larger calibrated screen, check exposure and sharpness and work on the selected pic until it's the vision they wanted to share. Everyone else just wants to pretend they have an amazing life and share what they eat at every meal. Have fun with that but keep the phone crap off my camera.

You're talking about two wildly different demographics; one is a snapshot taker and one is an enthusiast/hobbyist/pro. 40 years ago, the snapshooters used their pocket Instamatics (or equivalent); almost every household had at least one. Comparatively, very few houses had a SLR or other ILC higher end camera. ILCs were for those who were interested in a higher level of photography. A lot of them probably had a darkroom in their house too. But even if they didn't, the photos produced by a capable user of an ILC had far more potential. Pocket Instamatics were for those who wanted convenience; aim, push a button, throw the cartridge in an envelope, and mail it away.

ILCs have nearly always been a niche market that appealed mainly to those who wanted more than what their point and shoot cameras could deliver, but point and shoot cameras were always the "gateway drug" so to speak.

Early on in the digital imaging age, there was a boom of DSLRs because a lot of people thought they could get "pro" results by simply using one. Now we're simply witnessing a normalization of the traditional market bifurcation with a digital twist.

Firstly, most of the manufacturers have track record of ignoring what customers want. So it's not surprising that in a tough market some of them get hit in the solar plexus. Please God, don't let them start failing! - we all have too much money tied up in glass, and in most cases if won't migrate to another brand!
The big noise in the past year has been the flood of mirrorless cams. I can't say I'm falling over in the rush to buy one. There's a lot of hoo-ha out there about "why" mirrorless. The fact remains that what you can do these days - even with a half frame or a 1 inch sensor - makes a lot of the discussion of the virtues of mirrorless rather pointless. How much better than the performance of beasts like the D5, the D500, the D850 and so on can you go? Does the "possibility" of further improvement really mean anything anyway? - since ALL photos are ultimately going to be viewed on some kind of screen, and even the largest one in the world today only has about 35MB - and the rest are going to be printed, with the size of the ink dots limiting the sharpness of the image, way below the performance of most of the best of modern cameras.
And of course for "early birds" who thrash after the latest in the hope that it will improve their photography, there's the vexed and difficult question of lenses. It takes ages to build a suite of lenses covering the needs of all the customers out there, and in the meantime if you want a fair range, you've no choice but staying DSLR or compromising with an adaptor.
Rather than even attempting to sort out all this stuff, I think I'll just go grab one of the cameras I already have, and take a photograph instead. Immensely more satisfying that all this stuff for gear heads.

Few who seriously follow the fortunes of the companies that manufacture "stand alone "cameras will be surprised at the announcements concerning Nikon. One would be forgiven for suspecting that similar news will be forthcoming from Canon and perhaps others. There are likely fewer and fewer photographers who are willing to pay the ever increasing prices for new cameras and lenses that fill fewer and fewer niches.and which do not yield easily seen superior results over previous models.

Indeed, the rumors of falling sales of digital printing papers would argue that more and more images are being shared over the computer and less and less images are being printed. For those who share images via various sites over the computer newer camera models have almost no advantages over the model that they have used for some time.

Also, the increasing sophistication of digital editing programs has played a major roll in decreasing the necessity for new cameras. When such programs are used there is little evidence that images from various cameras can be differentiated when seen in print or on a computer screen. Images can be edited so that such are almost completely fungible.

Others have commented on the iPhone cameras as substituting, in many instances, for dedicated stand alone cameras.

For the reason stated above, it is hard to see how the breathless announcements of new cameras and lenses that likely provide minimal improvement over previous lenses but cost hundreds more will result in any meaningful increase in sales. Similarly, cameras with higher pixel counts are for most not a necessity.

In sum and substance, it is difficult to see a way to change the downward trajectory for Nikon camera sales.

Nevertheless, having been negative, one way forward might be to emphasize digital movie capture and production. One notes with some interest the decision by Sigma to market a new full frame Bayer array camera which seems squarely aimed at those seeking a system that can be used to advance the digital movie work flow. It will be interesting to learn how well this new camera is received and sells.

Perhaps an alternate camera sales paradigm in which one LEASES a camera for a period of time might be another way to increase interest. Such a system would need to be skillfully conceived so as to be useful to both the consumer and the manufacturers.

I’m pretty clear on the different markets Nikon serves regarding photography. Where they are really hurting is the pocket cameras, bridge cameras, and less so of the entry level cameras. The preceding are being replaced with Smart Phone cameras. It was a huge market for Nikon years ago when cameras in phones sucked. Now, it’s a lot easier to pull your phone out, snap a memory and post it on social media in seconds. Why carry a phone and a pocket camera? That’s what Nikon means when they’re talking enthusiast and pro intensification. That’s where the dollars are being spent.

I felt so sorry for Nikon I went on-line and bought a Nikon Z6 with 24-70mm lens. I hope that helps.

Ugh... didn't we already read this story about Canon just 2 weeks ago?!? Surprised they were not referenced together as a trend in the DSLR industry vs being so company specific.

I own a camera store. Nikon has treated us dealers like crap for years. They lost their loyalty. We are the ones who teach and sell accessories. Profits are at a all time low. We can't afford to advertise their name. And they never listened to us. I could go on and on.