Q&A of Financial Results for the Year Ended March 31, 2011
The following includes questions and answers at the conference for the financial results for the Year Ended March 31, 2011.
Q. What has been the impact after the March 11 earthquake and tsunami?
A. The manufacturing facilities which halted as a result of the March 11 earthquake and tsunami have gradually resumed normal operation before the end of March, and at present, production capacity has recovered to what it was before the earthquake. However, the parts procurement supply chain has been disrupted and we are still unsure how long it will be before we see a complete recovery. Forecasts for this period are based on the assumption that the supply chain will be restored some time following autumn.
Q. What can you tell us about changes to corporate expenses?
A. Up until now, common expenses for the Group (primarily basic research expenses and expenses for the administration departments) were fully allocated to each operating division. However, aiming for further transparency in performance determination for each operating division and to enhance cost awareness at head office, all expenses other than those which can rationally be allocated to each operating division will be categorized into a separate category as "Corporate Expenses".
Precision Equipment Business
Q. What can you tell us about the NSR-S620D ArF immersion scanner?
A. As of February 2011, we achieved our target specifications of increasing throughput to 200 wafers/hour and the throughput of over 3,000 wafers/day under the manufacturer's process specifications. We will continue to fine-tune the technology to stably provide this production capacity and ensure total customer satisfaction.
Q. What is the outlook for the market of IC/LCD steppers and scanners?
A. We expect that unit sales in the market for IC steppers and scanners will remain nearly on par with the previous period and we estimate an increase of several units in our sales for this period under review. Although we also expect the sales in the market for LCD steppers and scanners to remain at nearly same level with the previous period, demand for panels for smart phones and tablet computers continues to be strong. Therefore we forecast that LCD steppers and scanners for the production of mid-sized and smaller panels will make up the majority of product mix. In connection with this product mix, there has been a considerable increase in orders for LCD steppers and scanners for mid-sized and smaller panels for high definition applications.
Q. How are Precision Equipment business earnings?
A. The increase in sales ratio for the NSR-S620D ArF immersion scanner will improve profits for IC steppers and scanners, while sales for LCD steppers and scanners for mid-sized and smaller panels will also increase resulting in a significant increase in sales and operating income for the Precision Equipment business as a whole. We expect our operating margin to move into double digits for this period.
Imaging Products Business
Q. What can you tell us about the digital camera market?
A. Although the size of the market for digital SLR cameras for the year ended March 2011 grew by approximately 30% compared to the same period the previous year, sales for the Nikon Group fell below market growth due to the effect of production delays during a certain time of the period. However, we expanded our market share in the 4Q period in all regions compared to the previous quarter. In particular, Nikon gained top share of this market in the US during the 4Q. On the other hand, despite only slight growth in the compact digital camera market, Nikon achieved a considerable increase in sales in this market. Uncertainty concerning the parts supply chain following the March 11 earthquake and tsunami makes it difficult at present to draw up any accurate forecasts for the current period.
Q. How are Imaging Products business earnings?
A. Profit earnings for this period include current problems with the supply chain and potential risks that may arise as a result. Sales and operating income are down in comparison to the previous period as the new standard however this is a direct result of factors including an increase in costs due to a fall in operation attributable to procurement constraints and an expected drop in prices due to increased market competition once problems with the supply chain are resolved. In addition, sales and operating income is down approximately 3.5 billion yen as a result of deducting cash discounts, a sales promotion measure that had been included in non-operating losses, from the sales figures in the current period.