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Thailand Flooding Impacting Digital Camera Market

11/07/2011 12:08:00 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. (See story on p. 6.) 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."

Doug Olenick contributed to this story.
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