Hogan on Olympus financials

Started Feb 16, 2013 | Discussions thread
Abrak Veteran Member • Posts: 3,862
Re: Care to make a gent's bet?

YouDidntDidYou wrote:

John Koch wrote:

YouDidntDidYou wrote:

...so "Olympus' inventory of cameras grew, which means they weren't able to sell the product they already made" is a VERY MISLEADING statement.

Inventory is fluid.
...anyways example
year 2011 inventory £100 average selling margin 50% = £150 = £50.00 gp
year 2012 inventory £122 average selling margin 65% (less low margin p&s, more lenses etc maybe?) = £201.30 = £79.30 gp and this doesn't even factor stock turn cycle
1. I'm not judging mirrorless as a stand alone but Olympus have stated tey are changing their product mix away from low margin p&s and that mirrorless is profitable for them: they don't have to spend money R & D and manufacturing sensors,evfs or oleds, mft has less moving parts than DSLRs and the initial mft R&D should be recouped by now after 4-5 years.
2. They're have been far less Olympus point and shoot launches in the last 15 months
3. You and I have no idea how much it costs to manufacture an OLympus PEN
4. margin mix is still a factor in inventory, also the 2012 inventory maybe a more honest valuation than the 2011 inventory valuation.
5. "better credit terms" might be more time to pay, cheaper prices ie maybe Sony is selling sensors to Olympus at better prices on longer credit terms than they were getting off Pansonic, we don't know....
Inventory valuations are subjective just like house and share prices, you'll find this out if you sell or buy a business with "stock at valuation both parties will have their own stocktakers you will often come out with 2 very different figures............
So what's the gent's bet?

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living life to the Four Thirds!

At 1Q results Olympus gave a forecast for the imaging division of sales to the year end March 2013 of 149bn yen and presumably based their manufacturing production on those forecasts.

Six months later, in last weeks 3Q results they gave a forecast of sales for the year to March 2013 for the imaging division of 110bn yen, so they are going to miss their sales target by 39bn yen.

It is hardly surprising then that they have seen a build up in inventory from excess production from product they were unable to sell. Nothing very misleading about that.

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