twice connect
careers

Thai Flooding Impacts Digital Camera Market

11/07/2011 12:01:00 AM Eastern

NEW YORK — Digital camera makers Canon,
Nikon and Sony have all reported damage to either
their facilities or to component factories in Thailand,
which will slow production.

Nikon said it was still trying to estimate the potential
damage caused by recent flooding to its Nikon
(Thailand) Co. Ltd. manufacturing operations, but
added that there had been no casualties to any of
the company’s employees.

Nikon said the situation is likely to cause shortages
in certain products, but gave no word on which
products would be affected or if any new products
planned for release were impacted by the disaster.

The production operations, which are located in
Rojana Industrial Park in Ayutthaya Province in Central
Thailand, sustained damage to the first floor of
all buildings where water levels approached 2 meters
deep days after the flooding began. Production
had been shut down since Oct. 6.

No decision has been made on when it
will resume. The company said it will purchase
new manufacturing equipment and
looks to reschedule production assignments
as quickly as possible.
Canon reported that flooding in Thailand
had forced it to lower its earnings guidance
for the upcoming quarter.

Canon said the
disaster would likely cut annual sales by 50
billion yen ($657 million) and operating profit
by 20 billion yen for the financial year to the
end of December 2011. The company cut its
annual operating profit forecast 5 percent to
360 billion yen ($4.7 billion), citing a combination
of the flooding, the strong value of the
yen against the dollar and euro and the continued
weak economic outlook for the United
States and Europe. The figure was partially
offset by cost-cutting and a faster-than-expected
recovery from the March earthquake.

Sony said in its fiscal second-quarter financial
report that its earnings are being affected
by the floods. Specifically,
the company will have to delay the introduction
of its Nex and Alpha cameras, knocking
back annual profits by 25 million yen.

The impact on the digital camera market is
being seen by Best Buy. The retailer’s holiday
plans for digital imaging was first hit by the tsunami
in Japan, and now the record flooding in
Thailand is hobbling component factories and
constraining supplies of finished goods.

“Digital imaging has really had a very difficult
year,” Mike Vitelli, Best Buy Americas
president and corporate executive VP, acknowledged.
“I’m not sure what the total
impact of that will be, but there were some
shortages in the first half and it looks like
there will be some in the second half as well.”

— Additional reporting by Doug Olenick