Q1.How would you summarize the fiscal year ended March 31, 2016?
The environment in each of the markets for digital camerasinterchangeable lens type, interchangeable lenses, and compact digital cameras remained harsh, and their markets shrank compared with the previous fiscal year. The number of units sold by the Company in all three genres decreased year on year, with the result that net sales decreased 11% from the previous fiscal year to ¥520.4 billion. Negatively impacted by the decrease in sales and also by the appreciation of the yen, operating income fell 19% year on year to ¥45.7 billion.
The result from the year-end shopping seasonthe biggest of the yearwas sluggish and there was also an impact resulting from the new D500, the launch of which was postponed in order to first secure sufficient quantities as we received a level of orders that had exceeded our expectations.
However, we were still able to secure an operating income ratio of 8.8%. If the exchange rate fluctuations are omitted, this was at a level almost unchanged from the previous fiscal year. With regard to the D500 launch postponement, the problem was that we were unable to grasp adequately the level of demand.
Q2.Please tell us about the progress made with the measures under the Medium-Term Management Plan.
With regard to Customer Relationship Management (CRM), we have been collecting and consolidating sales performance data accumulated over the past 10 years. In addition, we are promoting initiatives that will encourage customers’ willingness to make a purchase. Not only supplying information on new products as previously, we will carry out more active approaches, such as recommending by customer the most suitable lens and accessories in conjunction with new products.
With regard to further tapping into and developing emerging economies, we conducted reviews of our strategies by region. Due to falls in resource prices in recent years, the economic situation in Russia, Brazil, Indonesia, and other countries where growth is expected has been unfavorable, and growth in the Middle East has come to a standstill. In contrast, there are also countries, such as India, where demand for digital SLR cameras has increased year on year, so we are prioritizing depending on the region. We are reviewing and planning to optimize our initiatives in both the large-scale European and U.S. markets and in emerging economies.
In August 2015, we established a Global Marketing Strategy Department in Singapore. The aim is to respond rapidly to changes in the market and bring about timely marketing communications by transferring and centralizing global marketing functions in Singapore, as it is a global business base and has access to a diversified workforce. Already the move is bearing the expected fruits.
Q3.Please tell us about your business policies for the fiscal year ending March 31, 2017.
In addition to the ongoing severe market environment, the suppliers of parts for a wide range of Nikon products, including digital camerasinterchangeable lens type and compact digital cameras, were affected by the 2016 Kumamoto Earthquake, which has hampered production and sales. Giving priority to the manufacturing of highly profitable middle and high-end digital SLR cameras, we will focus on recovering from that situation.
We are in a difficult environment and have also seen the challenges of exposure to diverse risk, including on this occasion procurement aspects. We will again review our overall operational processes including development and production and build a more robust business structure.
The Imaging Products Business currently provides the backbone of the Nikon Group’s revenue base. I therefore think it is necessary to improve the issues we are facing at an early stage and strengthen the Imaging Business Unit’s profitability base. While compensating through M&As and alliances for those fields in which Nikon’s technologies will not be sufficient, if we were able to top up with value-added products and businesses, it would probably become a notably different Imaging Business Unit to what it has been up to now. Breaking out of our current shell, we will aim to make a fresh start, united as one, in an Imaging Business Unit that boldly faces challenges.