Nikon announced FY2014 results after trading hours in Tokyo yesterday and investors punished them today, currently down more than 5% intraday. Nikon stock is now trading well under the previously predicted lows.
- Full year unit sales of DSLRs and mirrorless cameras plunged 17.6% from last year and below even Nikon's own lowered guidance made just a month prior to the fiscal year-end. This suggest that Nikon did not have a good grasp of the deteriorating market conditions. Unit sales from lenses and from the P&S compact segment were also lower than forecasted.
- Net sales for the Imaging Division is down 9% compared to last year to 680b Yen, and net sales for the entire company (980.5b Yen) is also below consensus estimates.
- For the year Nikon had weak sales in Europe in addition to China. So they are having trouble in both mature and growth markets.
- The Imaging division managed to increase profits 6% by aggressive cost cutting and "optimization of product mix in entry class SLR cameras"
- Nikon is implementing "Minimum Cost Operation" throughout the company
- Nikon raised the possibility of a "race to the bottom" price-war happening, where competitors might possibly "launch an offensive with low-priced products"
- Like many Japanese companies Nikon is looking for new business opportunities in the health and medical markets
- For the upcoming year, Nikon is expecting better market conditions in later in the year; however, overall they are forecasting further drops in net sales (-4.1%) and net income (-3.9%) in 2015 compared to 2014.
Where does Nikon go from here? Nikon stock is now the cheapest in years, but unless Nikon management shakes off the status quo the company's outlook may slide even lower. Nikon needs some innovative product announcements this year, outside of the usual incremental upgrades.