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Imaging Products Business

As of September 30, 2014

Overview

Main Products

Digital cameras, film cameras, interchangeable lenses, speedlights, accessories, software, sport optics

Consolidated Financial Results

Net Sales

Net Sales for the year ended March, 2014 were 685.4 billion Yen.

Operating Income

Operating Income for the year ended March, 2014 was 64.2 billion Yen.

Market Conditions and Business Trends

Conditions in the digital interchangeable lens-type camera market remain harsh, and the market is expected to shrink. However a moderate improvement is forecast in the latter half of the fiscal year ending March 2014. The market for compact digital cameras is also set to shrink, although the rate of shrinkage is expected to be relatively modest compared to last year.

Shipments of Digital Cameras

Shipment Units

Shipment Units in 2013 were 62.83 million units.

Shipment Amounts

Shipment Amounts in 2013 were 1,168.4 billion Yen.

  • Source: Camera & Imaging Products Association
  • *Shipment units=domestic shipment units+export units (member manufacturers only)
    Shipment amounts=domestic shipment amounts+export amounts (member manufacturers only)

Shipments of Digital Camera with Interchangeable Lens

Shipment Units

Shipment Units in 2013 were 17.13 million units.

Shipment Amounts

Shipment Amounts in 2013 were 678.2 billion Yen.

  • Source: Camera & Imaging Products Association
  • *Shipment units=domestic shipment units+export units (member manufacturers only)
    Shipment amounts=domestic shipment amounts+export amounts (member manufacturers only)

See Financial and Business Data for the Year ended March 31, 2014 (May 13, 2014)

Sales volume of Nikon Digital imaging products (Sales & Forecast)

  • Digital Camera with Interchangeable Lens
  • Interchangeable lenses
  • Compact DSC

Business Strategy

Strategic direction

Imaging Products Business
Launch innovative new products.
Introduce new marketing strategy.
Gain more depth and new exposure in emerging markets.
Cut costs from development all the way through sales.

An Interview with the General Manager of Business Unit

In this challenging market environment, we find it is important to use flexible judgment and quick action to build up a string of successes. We will add new value by merging user enjoyment with the reliability of our technology and quality.

Nobuyoshi Gokyu
Senior Vice President
General Manager of Imaging Business Unit

Q1:Could you give us an overview of the fiscal year that ended in March 2014?
A1:

In the fiscal year ended March 2014, the market for digital cameras was sluggish and difficult, particularly in China and Europe.

With economic recovery still lagging, the market for interchangeable lens-type digital cameras struggled to gain a foothold, and as a result sales of cameras were lower than in the previous year.

Sales of compact digital cameras were down as well, but since the decrease was less than that of the market as a whole, our market share actually increased. I believe this was thanks to our strategy of rolling out a full line of cameras, from entry models to high-end products, which set the Nikon brand apart from other brands, and to retailers that wanted to stock their shelves with our brand of attractive products.

During the fiscal year, we placed more emphasis on revenue than on volume sold and thus, centering on the digital SLR camera, we took a fresh approach regarding sales channels. We also managed to aggressively slash expenses, streamline development, design, and manufacturing, and lower supply costs so that in spite of the sluggish market, profits increased.

Q2:What do you predict for the future market environment?
A2:

As technology has matured, our products themselves can no longer be as distinct. Consequently, price wars are becoming fiercer, making it essential to continuously and thoroughly reduce costs to maintain a profit.

Looking at different regions, Europe, particularly Russia, has demonstrated a slow financial recovery. North America is bullish, whereas South America is struggling. In Asia, developing countries, notably China, still have promising growth prospects, so a gradual recovery has been made from the slump in the fiscal year ended March 2013.

Q3:What initiatives lie ahead for the Imaging Business Unit?
A3:

We are working on three strategies to boost profits in the medium-to-long term.

The first strategy is to generate market activity by introducing innovative products. This may involve working with other companies. The second strategy is to exploit new marketing techniques to stimulate demand. One such technique is strengthening customer relationship management (CRM), a main point of CLM,* which focuses on the relationship between the customer and the product. With customer data accumulated over the past 10 years on the approximately 200 million items we have sold, we are setting up a system to effectively use this large amount of data to make timely suggestions to customers in purchasing either new products or replacements or adding lenses. We plan to come up with novel products based on an analysis of this data in the hopes of bringing in new customers. The third strategy is to entrench ourselves and to exploit our advantage in developing markets, which we view as strategic markets for business development. Along with China, our most important market, we are pursuing activities in the markets of India, ASEAN countries, Central and South America, and Africa. Our plan for China is to focus on its third- and fourth-tier cities, which are home to 500 million people, thus increasing our presence to win a larger share of the growing Chinese market.

We are reducing costs by scrutinizing the entire supply chain, probing the developments, procurements, and manufacturing of every section while building on the measures each has taken to date. Our ability to enhance profits has two wheels: expanding sales and improving cost competitiveness.

  • *CLM: Customer Lifecycle Management
    An approach using vast amounts of data and information technology to ascertain the "lifecycle" events of customers, such as new purchases, repairs, upgrading, or adding lenses, to prompt the timing of cross-sales or to make fuller contact through support services, for example, thereby enhancing purchases of Nikon products.
Q4:What can you tell us about Nikon's basic thinking on supply chain management?
A4:

The main issue is how to best manage inventory. Although we need to have enough items in stock for growing markets, we are basically aiming to keep our inventories down. To this end, we are moving to weekly planning of manufacturing and sales, which means quantifying trends in worldwide manufacturing and sales based on projected demand and shortening lead times between manufacturing and sales. Reducing inventory even further requires more finely tuned forecasts. By meticulously identifying locally embedded information and being sensitive as we collect it, we can deliver products better tailored to regional needs in a timely way with nothing wasted.

Q5:What is your medium-to-long-term vision for the Imaging Business Unit?
A5:

The imaging industry has the potential to change considerably, becoming more diverse and employing technologies that we cannot yet imagine. For us, such change in the market could translate to promising business opportunities. We have high-level technologies in optics and image processing, and we want to combine these technological strengths with the joy of sharing video and images once they have been taken to provide new value. Regarding the hardware itself, of course, we can still further adjust the basics of taking a picture, but we must focus on making the compact digital camera more distinct from the smartphone with such features as an ultra telephoto function or a waterproof design. Taking a photo is the first step, but how can we make it more fun after the picture has been snapped? How would I more fully enjoy photography? This is what we must think about at all times, incorporating trial and error to offer added value and meet diverse needs.

I think the Nikon brand represents reliability and, even more so, quality. Our goal is to determine how to raise awareness among many more customers of our reliability and to build a lasting appreciation of it over time. Though market conditions may be quite difficult, we are positive and enthusiastically want to offer a variety of products to satisfy our customers. I firmly believe that the road to our great success will be by communicating openly throughout the organization and using flexible judgment and quick action to build up a string of successes.