From the Olympus Website--A little better translation than DPReview

Started Feb 14, 2013 | Discussions thread
John Koch
Regular MemberPosts: 446
Like?
Re: Camera companies and profitability and capitalisation
In reply to John King, Feb 16, 2013

John King wrote:

If you check the figures for each company, you might get a bit of a surprise.

Really?  Let's check: http://www.olympus-global.com/en/ir/summary/income/5year/index.jsp

Olympus has less market capitalisation than Nikon by around -30%; but annual sales to March 2012 of only about 10% less sales by value.

Olympus' primary assets are in its medical imaging sector, to which the company owes most of any market capitalization.  Unfortuntately, Oly has heaps more debt than Nikon or Canon, so its prospects are volatile: unless earnings recover, debt service will bleed it dry.

Having said that, the financial road travelled by Olympus over the last 5 years has been very rocky, with some massive write downs due to the fraud of the board members. If one adds back these write downs (after all, they are sunk costs) and considers EBIT, the company has actually been profitable at a trading level all through the GFC.

EBIT?  Doesn't interest on debt matter if you are a shareholder?  What's left after the bondholders and bank get their due?   But if the EBIT for the imaging divisions was -15B Y in 2010, -10B Y in 2011, and

The Y17.9 B "ordinary income" before writedowns for March 2012 came mostly from the medical and life sciences segments.  That is not a particularly great return on equity, whether measured against net worth before or after the 2012 writedowns.  But, if it came entirely from medical / life sciences, wouldn't it make sense to dedicate R&D to those areas, rather than wager for on a miraculous turnaround for the camera sector?

The nine-month results for December, 2012 show a 41.8% decline in ordinary profits.  The EBIT for the camera segment was negative.  Losses deepened from to  -3.9B Y to -8.8B Y.  Sales were down 17%.  Very possibly, the company will have to write down the value of camera inventories.

What does Olympus have to gain by investing one more Y into cameras at all?  Why bother with mirrorless if several other firms are entering the competition?  A "big picture" manager would probaly decide to sell the camera division ASAP.

http://www.olympus-global.com/en/common/pdf/n130212aE_n.pdf

So has Nikon, but I like the look of Nikon's overall figures better as they do not reflect the corrupt practices of the previous Olympus board.

Things aren't great for Nikon either, but slim profits are better than none, and it's not a case where non-camera business is the livesaver.

The real question is not whether one company's miseries are worse than anothers, but whether the misery won't be fatal, eventually, to just about all of them.  One way or another, there will have to be consolidations and cutbacks.   Would business based only on system cameras be profitable?  Perhaps.  But perhaps only at very high prices and with little competition.

Reply   Reply with quote   Complain
Post (hide subjects)Posted by
DSLRNew
(unknown member)
(unknown member)
Keyboard shortcuts:
FForum PPrevious NNext WNext unread UUpvote SSubscribe RReply QQuote BBookmark post MMy threads
Color scheme? Blue / Yellow