Nikon has released third-quarter (Q3) financial results for its 2021 fiscal year (FY2021), revealing the harsh realities of a shrinking market further impacted by the COVID-19 pandemic. As doom-and-gloom as the numbers may appear though, it seems Nikon’s Imaging Products Business has survived the worst of it and has set itself up for a sustainable future going forward.

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Nikon’s consolidated Q1-Q3 results include data from April 1, 2020 through December 31, 2020, as its fiscal years start on April 1 and end of March 31 of the following year. In order to get a larger picture of Nikon’s situation throughout the pandemic, nearly all of the numbers we reference will include the consolidated Q1-Q3 results rather than isolating only Nikon’s Q3, which doesn’t tell the whole story.

Nikon's latest financial results for its Imaging Products Business for Q3 and Q1-Q3 timeframe. Highlighted yellow is FY2021, while the columns to the left show the same timeframes for Nikon's FY2020 results. Click to enlarge.

Nikon’s Imaging Products Business revenue for FY2021 Q1-Q3 was ¥116.7B / $1.1B, down 38% (¥72.3B / $685M) year-over-year (YoY). During that same time, Nikon’s operating loss amounted to ¥28B / $265M, a decrease of ¥29.2B / $277M for the same period last year, which still showed an operating profit, albeit a relatively small one (¥1.2B / $11.3M). While the massive drop in operating profit doesn’t look promising, Nikon does note ¥16B / $151M of that loss was ’fixed asset impairments and disposal/write-down of inventory in Q2 and Q3, and ¥1.9B [$18M] of restructuring relevant expenses.’

The outside of Nikon’s Sendai Factory.

Based on the recent reports that Nikon is moving all of its camera and much of its lens production from Japan to Thailand, it’s likely Nikon is writing off much of the machinery it used in its domestic facilities in order to balance the books come tax time. It also seems Nikon had to get rid of excess inventory in Q2 and Q3, as demand was low at the peak of the pandemic’s impact on the global economy. Considering Nikon explicitly says mirrorless camera sales are doing well, it’s likely safe to say DSLR cameras were the victims of the inventory purge.

A bar graph showing the breakdown of unit sales for various product categories going back to FY2018. Click to enlarge.

Speaking of camera sales, Nikon says it sold 660K interchangeable lens cameras (both mirrorless and DSLR cameras) and 1.08M interchangeable lenses from Q1-Q3, a decrease of 720K and 1.18M, respectively, YoY for the same time frame. Much like we saw in Canon’s latest financial report, however, revenue from those sales hasn’t dropped in parallel with units (as a percentage), meaning the units that are selling tend to be higher in price. Nikon explicitly says as much itself saying its ‘shift to mid to high-end models for pro/hobbyist has been progressing smoothly, and unit sales price has risen.’ As for the numbers to back it up, revenue was down only 38.3% YoY for Q1-Q3, despite sales volume being down 52.2% for both interchangeable lens cameras and interchangeable lenses during that time.

A section of notes from Nikon's presentation that shows (highlighted yellow) its thoughts on its Imaging Products Business through the remainder of FY2021. Click to enlarge.

Looking forward, Nikon has revised its full-year FY2021 revenue and operating profit by ¥5B, to ¥145B and -¥40B, respectively, ‘thanks to increased revenue and advanced business cost reductions.’ Nikon says it will continue to advance its emphasis on producing mid-to-high-end models for ‘pro/hobbyist’ photographers.

It’s been a rough year for Nikon, there’s no denying that. But as nearly everyone else in the industry has in this unprecedented™ year, it appears Nikon is making the necessary moves to stay profitable through reducing costs (moving production from Japan to Thailand) and streamlining its product lineup to only the most profitable units (shifting to mid-to-high-end models). Only time will tell what the future holds for Nikon and its Imaging Products Business.

You can find the FY2021 Q3 financial results presentation and data on Nikon’s investor relations website.

Editor’s Note: (Monday, February 08, 2021 at 2:19 PM): Updated the headline to specify the double-digit drops were specifically for Nikon’s Imaging Products Business