Nikon (OTC:NINOY) Corporation (TYO: 7731) has released its financial results for the past fiscal year and provided forecasts for the current fiscal year, signaling steady growth and a strategic shift towards sustainability and technology solutions. The company reported a previous fiscal year revenue of ¥717.2 billion with an operating profit of ¥39.7 billion and announced an optimistic revenue forecast of ¥745 billion for the current fiscal year.
Nikon's CEO, Toshikazu Umatate, reaffirmed the company's commitment to its medium-term management plan, emphasizing growth in Imaging and Healthcare while scaling back expectations for Precision Equipment. The acquisition of RED, a cinema camera manufacturer, indicates Nikon's ambition to strengthen its position in the professional video camera market.
Key Takeaways
- Nikon's previous fiscal year revenue stood at ¥717.2 billion, with an operating profit of ¥39.7 billion and profit attributable to owners of parent at ¥32.5 billion.
- The company forecasts a revenue increase to ¥745 billion for the current fiscal year, with an operating profit of ¥35 billion and profit attributable to owners of parent of ¥30 billion.
- Nikon's medium-term management plan remains on track, aiming for an operating profit of ¥40 billion in FY 2024 and ¥70 billion in FY 2025.
- The acquisition of RED is set to bolster Nikon's expansion into the professional video camera market.
- Nikon plans to enhance shareholder returns, targeting a dividend per share of ¥60 by fiscal year 2026.
- A focus on sustainability and technology solutions is central to Nikon's Vision 2030.
Company Outlook
- Nikon expects growth in revenue and operating profit, with a target of ¥745 billion in revenue and ¥35 billion in operating profit for the current fiscal year.
- The company aims to reach an operating profit of ¥70 billion by FY 2025.
- Nikon's focus will be on quality of life domains, specifically Imaging and Healthcare, and less on Precision Equipment revenue.
Bearish Highlights
- Nikon has revised down its revenue plan for Precision Equipment, reflecting a strategic adjustment.
- The company has observed a decline in profit in all segments except for the Imaging Products business.
Bullish Highlights
- Nikon has achieved its revenue target of ¥700 billion two years ahead of schedule, driven by growth in Imaging Products and Healthcare.
- The company's acquisition of RED is expected to strengthen its video capabilities and market position.
- Nikon plans to maintain a profit of ¥40 billion in the Imaging Products business by launching competitive products and acquiring new customers.
Misses
- Despite overall revenue growth, Nikon's Components business did not contribute to this increase.
Q&A Highlights
- Nikon's management discussed the potential for profit improvement due to a recovery in the semiconductor market.
- The company outlined its plans for the Digital Manufacturing business to reduce losses and achieve profitability by FY 2026.
- Expansion strategies for the Healthcare and Components businesses were also highlighted, with a focus on system microscopes and applications, and collaboration with customers.
Nikon's strategic direction, as discussed by CEO Toshikazu Umatate, indicates a commitment to becoming a key technology solutions company by 2030. This vision includes a strong focus on sustainability, human capital management, and digital transformation. The appointment of Mr. Hiruta as Chairman of the Board is a step towards improving governance capabilities, aligning with the company's long-term goals of sustainable growth and meeting stakeholder expectations.
InvestingPro Insights
Nikon Corporation (TYO: 7731), known for its leadership in the optics and imaging industries, has shown a robust financial performance in the recent fiscal year. In light of the company's strategic moves and financial forecasts, here are some insights based on real-time data from InvestingPro and InvestingPro Tips:
InvestingPro Data:
- Market Cap (Adjusted): $3,770M USD, reflecting the company's substantial size and investor confidence in its market position.
- P/E Ratio (Adjusted) as of the last twelve months of Q4 2024: 16.95, suggesting that Nikon's stock may be valued attractively relative to its earnings.
- Revenue Growth as of the last twelve months of Q4 2024: 14.19%, indicating a strong upward trajectory in the company's sales.
InvestingPro Tips:
- Nikon has been a prominent player in the Household Durables industry, which is consistent with its strategic focus on Imaging and Healthcare solutions.
- The company has maintained dividend payments for 21 consecutive years and has raised its dividend for 3 consecutive years, demonstrating a commitment to shareholder returns.
These metrics and trends are particularly relevant for investors who are considering Nikon's stock in light of the company's recent acquisition of RED and its strategic focus on technology solutions. For those looking to delve deeper into Nikon's financial health and market potential, there are additional InvestingPro Tips available at https://www.investing.com/pro/NINOY. With the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to an extensive range of insights that can inform investment decisions. There are 9 additional InvestingPro Tips listed for Nikon, offering a comprehensive analysis of the company's performance and prospects.
Full transcript - Nikon Corp (NINOY) Q4 2024:
Muneaki Tokunari: Good afternoon dear participants. This is Tokunari present. I would like to thank you for your precious time out of your busy schedule to attend Nikon's Financial Results Briefing. I'm pleased to cover the financial results for the previous fiscal year as well as the forecast for the current fiscal year. In the previous fiscal year, revenue was ¥717.2 billion, operating profit was ¥39.7 billion, and profit attributable to owners of parent was ¥32.5 billion. Revenue grew, but profit declined year-on-year. By segment, except for the Components business, we grew in all the businesses in revenue, but the profit went down in all the businesses, except for the strong Imaging Products business. Annual dividend is ¥50 as we had forecasted. The top of the slide shows the revenue and the profit items, which I have just explained. As for the free cash flow in the center of the table, the deficit has been improved more than ¥100 billion since last year. Behind this one, first, the improved operating cash flow as well as the sale of the cross-shareholdings. Slide 5 shows the actual performance by segment. Far right hand, changed from the previous forecast we made in February, except for the Healthcare business and the Digital Manufacturing business, where we had one-time cars, we were able to go above the plan. From now on, I would like to mainly explain year-on-year changes. First, the Imaging Products business. The market here expanded, particularly in China. New Mirrorless product, Z 8 and Z F remained firm [ph] in sales, both camera bodies and lenses grew in sales volume. ASP or average selling price also rose with the help of exchange rates, both revenue and profit grew substantially. Operating profit being 16.6% landed at a high level following the previous year. Slide 7 shows the Precision Equipment business. Revenue grew in the overall Precision Equipment business as higher sales volumes in the main ArF lithography systems for semiconductors outweighed a decline in FPD lithography system sales volume due to the restrained capital expenditure at the customer side. Operating profit was down due to the big impact coming from the decline in the FPD lithography systems revenue and service revenue. In the Healthcare business, Life Science Solutions [Indiscernible] around the microscopes and contract cell manufacturing contributed to the growth in revenue. We made the progress developed in the private sector market and delivering solutions for drug discovery support in Life Science Solutions. Operating profit declined on top of the one-time cost of ¥4.1 billion incurred. Procurement cost increased and we had to make R&D and other advanced investments. The one-time costs were primarily in Eye Care Solutions, mainly for retinal cameras. We booked a provision and related sub expenses as well as the disposal and write-down of inventories. Slide 9 shows the Components business. EUV-related components and optical parts declined in sales due to the postponed capital expenditures and the lower utilization rates by semiconductor device makers. In quarter sales for robust declined due to the standard demand and the factory automation market, Photomask substrates for FPD decline in sales due to the panel market stagnation. Operating profit also went down. The last segment is the Digital Manufacturing business. This segment consists of the Industrial Metrology business and Advanced Manufacturing business, or ADM. Revenue grew, thanks to the full year base contribution by SLM (NASDAQ:SLM) Solutions in Germany, which became our consolidated affiliate. For your further information, on a standalone basis, SLM revenue was up by 15% year-on-year. This was a record high number. But operating loss expanded year-on-year. In the ADM business, though SLM made its first operating profit in the fourth quarter, but due to the intangible asset amortization cost for the SLM acquisition and increased cost, launching a base of operations in the U.S., the loss grew larger. The industrial metrology business turnout will be bigger negative results. On top of the sluggish sales, we had to bear one-time costs, including impairment of development assets and disposal and write-down of inventories due to the rationalization of unprofitable products. Next, allow me to explain our forecast for the current fiscal year. As shown in the bottom of the slide, our assumption for the exchange rates are ¥145 to the U.S. dollar and ¥155 to the euro. As for the full year forecast, revenue is ¥745 billion. Operating profit is ¥35 billion and profit attributable to owners of parent being ¥30 billion, we are expecting a growth in revenue but decline in profit. The revenue growth is coming from the firm Imaging Products business as well as the expansion in the Healthcare business and the Digital Manufacturing business, whereas we are expecting a drop in the profit and depression equipment business and the Components business due to the postponed investments at Samsung (KS:005930) conductor [ph] customers. Operating profit, though we are forecasting growth in revenue for the five business segments as a whole in our main business areas. But due to the one-time cost of about ¥5 billion for the reallocation of the new headquarters as well as the increased corporate expenses coming from the IT-related investments, we are forecasting a drop in profit. As for the dividend per share, we can expect a profit larger than the previous fiscal year. If we are to exclude the one-time cost of the relocations of the new headquarters, so we are assuming the dividend being ¥55, up ¥5. Now, please refer to Slide 13. This shows the financial highlights forecast for the current fiscal year, including the changes year-on-year basis. Now, allow me to explain our shareholder returns policy here on Slide 14. We are increasing our dividend step-by-step, targeting at the annual dividend of ¥60 for the fiscal year ending March 2026, and there is no change as for our plan to execute share buybacks of ¥30 billion or higher during the medium-term management plan. We are working on sales of cross-shareholdings given us resource buybacks. In the previous fiscal year, we sold a total of 22 issues with a total value of ¥16.6 billion. Next, allow me to explain the revision of business segment to be disclosed for the current fiscal year. In the current fiscal year, we have integrated the Digital Solutions business and the Industrial Metrology business, which are having similar customer segments into the Industrial Solutions business we have newly created. It will be disclosed as a part of the Components business. Slide 16 shows our forecast for the current fiscal year based on this new segment disclosure. I will explain the five segments one by one using the following slides. First, on the Imaging Products business. As shown on the bottom left, we are forecasting the market size of the digital camera interchangeable lens type being 6.1 million level. While a low-end model market may become smaller, but we believe high-end cameras for professionals and hobbyists are expected to continue to expand. Nikon continues to focus on mid high-end cameras and with the mirrorless lineup expanding, we'll go for 850,000 units of camera bodies up 50,000 year-on-year. And as for Lens, we will go for 1.35 million units, up 100,000 year-on-year. We completed our acquisition of RED on April 8th, a major cinema camera manufacturer and highly appreciated in Hollywood. We will co-develop unique products and intend to expand our business opportunities in this fast-growing professional video camera market. We expect to achieve and recover the ¥300 billion level revenue for the current fiscal year. Operating profit is expected to drop due to the RED acquisition costs and increased R&D expenses, but we expect to achieve about 15% in operating margin. So, the Imaging Products business is here to enjoy a continuing firm business. Next will explain the Precision Equipment business. As shown on the bottom left, FPD lithography systems are expected to grow dramatically from 16 units in the previous year to 39 units. Investments into new IT panels are increasing, and the demand for lithography system for high-resolution panels is expanding where Nikon excels. We expect to overcome reduction in the semiconductor lithography systems by having a strong FPD and services revenue. Operating profit for the entire business is expected to be ¥15 billion, the same level as the previous year. Slide 19 shows the Healthcare business. Revenue is expected to grow in all the businesses, Life Science, health Care, and the Contract Cell Manufacturing. Operating profit is expected to be ¥11 billion, thanks to the expected increase in sales as well as the reduction of one-time costs we had in the previous year for Eye Care Solutions related business. Slide 20 shows the Components business. We are a project and a decline in sales of EUV-related and optical components due to later than expected recovery in demand. We also expect to have a slight decline in revenue for the entire business. As for operating profit, we expect it to grow due to the disappearance of about ¥2 billion and one-time cost we had in the previous fiscal year, including impairment in the Industrial Solutions business. Lastly, allow me to explain the Digital Manufacturing business. Starting from the current fiscal year, we are only disclosing in this segment, ADM or Advanced Manufacturing business. SLM Solutions, we have acquired is expected to grow in revenue, thanks to the firm orders for large format metal 3D printer NXC series. In the last fiscal year, SLM's annual orders booked grew 40% year-on-year, a record high. As of end of March 2024, the order backlog had grown to ¥10 billion level. With these effects of the increased revenue and the one-time cost in the previous fiscal year gone, the size of the operating loss is expected to contract without fail. In the current fiscal year, SLM aims to turn profitable on its own based on full year EBITDA. For the next fiscal year, SLM will aim to produce its operating profit on its own. And in the following year, FY 2027 March, will go for a profit for the entire AMD (NASDAQ:AMD) business. So, there is no change as for this policy. Now, finally, allow me to make a summary. In the last fiscal year, we grew in revenue but declined in profit. The Imaging Products business enjoyed a continued good business, but due to the slowdown of the markets in other businesses as well as the one-time costs incurred, our profit declined. As for the current fiscal year, we expect to have a firm performance in the Imaging Products, the Healthcare and Digital Manufacturing business. So, we expect it to grow revenues. As for operating profit, if we exclude the one-time costs related was the new headquarters, it is expected to go above the previous level. And one year later, as the next fiscal year is going to be the last year of the medium term management plan, we have our target of ¥70 billion for our operating profit. In regard to our forecast for the next fiscal year and the progress of the medium-term management plan, Chairman and CEO, Umatate, will explain after me. I became President in April, and I intend to further expand our shareholder returns as short as possible, and I will further improve our management fundamentals so that we Nikon can truly enjoy our sustainable growth moving into 2030 and beyond. So, I would like to ask -- for your continuing support and understanding with our investors and analysts.
Toshikazu Umatate: This is Umatate, CEO. I would like to thank you for your precious time despite your busy schedule. I would like to explain the progress we are making in our medium-term management plan. Please go to Slide 2. The current medium-term margin plan has a scope of four years, and we have just reached the halfway point. However, as stated in the upper half of the document, there are no changes as for the overall framework, such as Vision 2030, financial targets, and others. However, we have reviewed our revenue structure in light of the changes in our business environment. To be more specifically, while we are to go for the upside revenue opportunities in quality of life domains such as the Imaging and Healthcare, we decided to revise down our revenue plan for the industry domains, such as the Precision Equipment. In our journey to realize Vision 2030, we are reviewing growth investments, while constraining M&A investments will expand our investments for organic growth and strengthen the management fundamentals -- this is the overall depiction of the progress in the medium-term margin plan. Now, allow me to go to the following slides to expand on details. As shown on the left-hand side of Slide 3, the first two years of the midterm plan, we continue to grow revenue. And as of FY 2023, we were able to achieve the revenue of ¥700 billion, our target in the final year of the midterm plan, two years ahead of the plan. Particularly, the Imaging Products business and the Healthcare business and the SLM Solutions in Germany, which we made our wholly-owned subsidiary during FY 2022 contributed to the growth in revenue. The bar graph on the right shows our revised capital allocation. While strategic investments including M&A are now down by ¥110 billion compared to the original plan, we now increased R&D to ¥20 billion and capital expenditures to ¥60 billion. We are going to go for our organic growth. At the same time, we will focus on shareholder returns. We are now planning to implement additional share buybacks as much as ¥30 billion or more. Now please refer to Slide 4. This shows the change in operating profit during the midterm plan. For FY 2023, operating profit was ¥39.7 billion. For FY 2024, if we exclude the costs associated with the relocation of the new headquarters, we can expect to have about ¥40 billion in operating profit. From FY 2024 to FY 2025, as shown in the right-hand side of the material, we can expect to maintain high earnings in the Imaging business with new products, and we can also expect to improve earnings in other businesses. In the Healthcare business, one-time costs will be eliminated. In the Precision Equipment business, FPD will expand its share. In the Components business, profit will improve driven by semiconductor market recovery. In the Digital Manufacturing business, loss is attributed to be reduced. So, we are now aiming at ¥70 billion in operating profit for FY 2025. Slide 5 shows the financial targets in the five businesses. This graph shows revenue horizontally and operating margin vertically and the size of the circle indicates the operating profit in the Japanese yen. The dotted circles are the FY 2025 targets when the original midterm plan was made. The colored circles show the FY 2025 target as of today. The two major businesses shown on the right, Precision Equipment will stably secure ¥25 billion, thanks to the diversified customers. Imaging Products is planning to maintain ¥40 billion level in profit by launching competitive products and acquiring new customers, including young generation. As for the three strategic businesses on the left, Healthcare business and Components business with its high operating margin, will firmly expand its profit. Digital Manufacturing business will reduce its loss and aim to generate profit in FY 2026. Now, allow me to expand on the initiatives in order to expand earnings. I will use two more slides to briefly explain business-by-business, how to increase customer acquisition, and expand value proposition. In the Imaging business, we will make efforts to expand new customers, particularly the young generation will also apply Z 9's advanced features to other camera bodies. We'll make a -- RED in the U.S. to become our fully-owned subsidiary. RED has unique customers and technologies and the professional video domain. We will strengthen our video capabilities. Healthcare. In order to further explore the private sector market, we'll expand system microscopes and applications. Now, please go to Slide 7. Precision Equipment. Here, the policy is to launch highly productive new products so that we can further grow FPD sales and expand our semiconductor customers. Components, with the integration of the former Industrial Metrology business, now for collaboration, we will run together with our customers, particularly in overseas in order to expand earnings opportunities. Digital Manufacturing, by expanding the sales of large-format metal 3D printers, we plan to fully enter defense and aerospace markets. Now, please refer to Slide 8. In order to support such business expansion on the mid to long-term basis, we believe we need to strengthen the business fundamentals. Human capital management and sustainability and strategy shown on the left, will make steady efforts to further improve them. Right side shows investment into DX and manufacturing as well as our efforts to further improve group management. Details are shown on Slide 20. We have asked Mr. Hiruta, independent external Director to be appointed as the Chairman of the Board to further improve our governance capabilities. Slide 9 summarizes the points I talked about today. In our medium-term margin plan, Nikon will actively invest into promotion of sustainability strategy and sustainable growth. We will strengthen human capital management, manufacturing and DX, and we will deploy our core technologies into promising markets. Where we'll be in 2025? We will try to become an entity providing products and services, optimized to meet our customer needs. Furthermore, we Nikon have Vision 2030. We'd like to become a key technology solutions company to support the global society where humans and machines co-create seamlessly. Through our business activities, Nikon would like to make its contribution to realize a sustainable society. Nikon would like to realize sustainable corporate values and would like to meet with expectations of the entire stakeholders. We can ask for your continuing support. I would like to thank you for your kind attention.
End of Q&A:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.