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Nikon cuts profit guidance on weak camera sales in Europe

TOKYO -- Nikon on Thursday downgraded its net profit estimate for the year through March 2015 to 38 billion yen ($368 million), 19% lower on the year, due mainly to sluggish sales of digital cameras in the key European market.

     The company had earlier forecast 45 billion yen, down 4%. Sales are now seen falling 8% to 900 billion yen -- 40 billion yen short of the previous estimate. Operating profit will likely decline 16% to 53 billion yen rather than edge up, undershooting the latest average market projection of 60.8 billion yen.

Price competition is heating up in Europe and North America in entry-level SLRs.

     The primary culprit is the lackluster performance of the mainstay camera business. Nikon now expects to sell just 5.05 million interchangeable-lens cameras in fiscal 2014, down 12% on the year and 350,000 fewer than the old forecast. And in compact cameras, it has lowered the estimate by 1.5 million units to 7.5 million -- a 33% year-on-year drop.

     Sluggish performance in Europe, where Nikon rings up about 30% of its camera sales, is a major factor. "We are struggling, especially in Germany and Russia," said Junichi Itoh, senior executive vice president. "Bad economic conditions are dampening consumption, and high-end models for the affluent are falling in Russia."

     Nikon has also revised its assumed exchange rate. It now sees the Japanese currency at 136 against the euro, 4 yen stronger than before. This is seen pushing down operating profit by 4 billion yen.

     For the first quarter ended June 30, sales dropped 26% on the year to 177.4 billion yen. Operating profit plunged 42% to 3.5 billion yen, while net profit shrank 17% to 3.6 billion yen.

     Sales of interchangeable-lens cameras fell 31% to 1.1 million units amid weak demand in Japan, Europe and the U.S. The drop was sharper than rival Canon's 19% decrease. "Price competition in entry-level models is intense in Europe and the U.S.," Itoh noted.

     Meanwhile, the precision equipment business posted a 2.5 billion yen operating loss.

(Nikkei)

 

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