Olympus Compact Camera Sales to Extend Drop Next Year, CEO Says
Stock Chart for Olympus Corp (7733)
Olympus Corp. (7733) said sales of its compact cameras may fall by half next fiscal year, extending a decline as consumers increasingly use smartphones such as Apple Inc. (AAPL)’s iPhone to take pictures.
Volume sales will drop to about 1.35 million units as early as the year starting April, Chief Executive Officer Hiroyuki Sasa said in an interview in Tokyo May 20. The company forecasts it will sell 2.7 million compact cameras this fiscal year, falling 47 percent from the prior 12-month period.
Olympus joins Canon Inc. (7751), the world’s largest camera maker, in projecting shrinking demand for compact models. Increased sales of higher-end mirrorless digital cameras will make up for the earnings shortfall from compact ones, helping the camera division at Olympus break even this fiscal year, Sasa said.
“The bottom line is that we can’t make profit from compact cameras,” Sasa, 57, said in the interview at the company’s headquarters in Tokyo. “We’ll focus on selling mirrorless models and lenses.”
The camera division will break even in the 12 months through March, ending three years of losses by saving 23 billion yen ($224 million) from steps including job cuts and factory reorganization, Olympus predicted this month.
The unit, responsible for 14 percent of revenue, had an operating loss of 23 billion yen in the year ended March, Olympus said May 15. The medical business that includes endoscopes, devices with tiny cameras used to look inside the human body, contributed more than half of sales and recorded a 28 percent gain in operating income to 87 billion yen.
Olympus, also the world’s biggest maker of endoscopes, rose 0.2 percent to 3,185 yen in Tokyo trading yesterday. The gain extended the stock’s gain this year to 91 percent, compared with a 48 percent advance for Japan’s Topix Index.
The shares are recovering for a second year after plunging 59 percent in 2011, following the company’s admission of an accounting fraud lasting more than a decade and the ouster of former CEO Michael Woodford.
Olympus canceled dividends in 2011 after restating five years of earnings. It also took a $1.3 billion cut in net assets after saying it inflated fees for takeovers and overpaid for three companies to conceal past investment losses.
Steering the camera business back to profit is a condition for restarting dividend payouts, Sasa said.
Annual sales of mirrorless digital cameras at Olympus will probably rise 67 percent to 1 million units in a few years from 600,000 in the 12 months ended March, Sasa said, without giving a more specific timeframe.
“The market is growing,” Sasa said. “Customers in countries such as Japan, Germany and Singapore are recognizing the value added to our products.”
Net income will rise almost fourfold to 30 billion yen this fiscal year, led by higher sales of endoscopes, Olympus said May 15. It posted net income of 8 billion yen in the 12 months ended March, compared with a loss of 49 billion yen a year earlier.
Canon in April forecast full-year net income that missed analyst estimates because of shrinking demand for compact models. The company also cut its 2013 sales target for compact cameras by 15 percent to 14.5 million units.