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Japan-Update

With sharper focus, Nikon looks to beat first-half profit forecast

Digital cameras' comeback and streamlining behind improvement

Nikon's D7500 single-lens reflex digital camera has sold well since its launch in June.

TOKYO -- Nikon's operating profit for the April-September half apparently shrank about 30% on the year, but beat projections of a 37% plunge thanks to improved sales of digital cameras and restructuring.

The Japanese manufacturer probably took in around 19 billion yen ($168 million) in group operating profit. This would come after Nikon upgraded its profit guidance by 6 billion yen to 17 billion yen in August. Sales likely dipped 1% to around 340 billion yen, but that would beat the 331 billion yen outlook.

Total shipments of digital cameras by value rose 23% on the year from January through August, according to the Camera & Imaging Products Association, a Tokyo-based industry group. Japanese makers account for the bulk of those deliveries.

Digital camera sales have declined in response to the spread of smartphones. But highly functional top-line models have reportedly drawn a following from people who post pictures on social media platforms since the cameras produce the type of expressive images a smartphone cannot deliver.

Nikon has also seen strong demand for interchangeable lenses, especially in Western markets. The D7500 camera, launched in June at a mid-range price, is also selling well.

The company's entire imaging products segment, which includes digital cameras, apparently sold fewer high-end items than a year earlier, but the segment's operating profit is seen topping the forecast anyway.

The profit at Nikon's precision business, which handles lithography systems for semiconductors and flat panel displays, is expected to decrease by a smaller margin than anticipated. The group is restructuring research and development costs as well as other expenses at the semiconductor equipment operation.

Nikon's streamlining efforts are also contributing to improving earnings. The company announced sweeping structural reforms in November last year, with the main focus on the long-bleeding semiconductor equipment business. The group cut roughly 1,000 domestic positions by the end of March 2017.

This fiscal year, Nikon started using return on invested capital as a key performance indicator. That entails narrowing production to top-selling items and effectively allocating advertising expenses.

Nikon projects its sales will decrease 7% to 700 billion yen for the full year ending March 2018. The company also expects to turn in a 45 billion yen operating profit, up from fiscal 2016's 700 million yen. Analysts believe fiscal 2017's black ink will actually come to 49.1 billion yen, but Nikon is likely to keep its guidance in place due to variables such as the progress of the reforms. Nikon will announce first-half earnings Nov. 7.

(Nikkei)

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