Q&A of Financial Results for First Quarter of the Year Ending March 31, 2014
The following includes questions and answers at the conference for the financial results for First Quarter of the Year Ending March 31, 2014.
Precision Equipment Business
Q. There are reports in the media that investments in semiconductors will increase with the recovery of the memory market. What are the chances of increasing your market share?
A. The memory market will definitely bounce back, and we feel there are opportunities in capital investments. Our newest product, the NSR-S622D, currently under evaluation by customers and is performing well both in terms of overlay accuracy and throughput. We would like to have the results as soon as possible but fairly assume it will take approximately three more months before we know.
Q. What are the prospects for the LCD Steppers & Scanners business next fiscal term?
A. Although it is still early to make accurate forecasts, we guess the market for small and medium-sized high-definition panels will continue to be favorable. We have great expectations for expansion of demand for the LCD Scanners for the 10th generation panels and beyond as resolutions of large-screen televisions such as 4K2K or 8K4K displays in the future.
Imaging Products Business
Q. What are the prospects for the business environment?
A. Sales of digital cameras in the 1Q period in the Americas, Europe and Asia excluding China were below what were anticipated at the beginning of this fiscal year. We expect these harsh conditions to continue in the 2Q period and beyond. We were hoping the market in China would recover in the second half of this fiscal year, allowing us to regain our pace in expanding the market. However, we now feel it is more realistic to expect recovery of Chinese economy to be delayed to almost the end of the fiscal year.
Q. Tell us about improvement in the operating income ratio in the latter half of the fiscal year.
A. We are keeping inventory of our digital SLR cameras to extremely low levels. We plan to launch new products in the latter half of the fiscal year expect a shift towards newer products that have higher profit margins.
Most of the interchangeable lens-type digital cameras for which we lowered the number of forecasted sales were non-reflex digital camera, the Nikon 1 series. To raise the profitability of this category we will cut sales expenses and review our product planning.
As for compact digital cameras, we develop them ourselves but are outsourcing a greater proportion of their final assembly, enabling us to remain in the black even as the market continues to shrink. We are currently working on further cutting costs in response to recent dramatic changes in the market.
In the plan we reviewed this time, we have incorporated the profit improvement measures of 20 billion yen that cut procurement cost already implemented since the beginning of the fiscal year and cut sales expenses newly added.
Q. Tell us about the establishment of the Management Measures Committee.
A. In view of the harsh business environment that has been affecting our company recently, we established the "Management Measures Committee" on August 5, 2013 with President Makoto Kimura as the chairman.
The committee directly manage our in-house companies which normally have decentralized authority by the end of this fiscal year in order to accomplish our new financial targets and build resilience towards the new fiscal year. That ensures immediate implementation of specific measures including reduction of inventory, cost reduction, reviewing the balance of internal and external manufacturing, reviewing R&D projects and capital expenditure plans.