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Olympus Scales Back Camera Business With Loss

Tokyo – Due mainly to growth in its medical equipment businesses, Olympus said Wednesday it returned to black in fiscal year 2012.

It reported a group net profit of $78.4 million (8.02 billion yen), compared with a loss of $479 million (48.99 billion yen) in the previous year.

But company president Hiroyuki Sasa said Olympus sustained a greater than anticipated operating loss of $225 million (23.07 billion yen) from its imaging business, mainly consisting of digital cameras.

As a result the company said Wednesday it is cutting back production of cheap low-margin compact point-and-shoot cameras and will shift its focus to high-margined mirrorless interchangeable lens cameras instead.

Olympus reported an operating profit of $343 million (35.08 billion yen), down 1.2 percent, on sales of $7.2 billion (743.85 billion yen), down 12.3 percent.

Olympus cut its compact digital camera sales forecasts to 2.7 million units for the current business year, compared with 5.1 million units in fiscal 2012.

The company said it will continue to focus on development and sales of mirrorless cameras, while drastically reducing the compact camera line.

Sasa said restructuring the imaging business is “one of our top priorities.”

The company has already started to significantly reorganize its manufacturing systems, and has consolidated five factory sites into two in Shenzhen and Vietnam.

It will cut R&D expenditures and operating costs, while substantially reducing the number of camera models, Sasa said.

The company is now focusing resources on high-margin mirrorless cameras and vowed to “improve responsiveness to market changes.”

In shifting the focus only to high-margin mirrorless models, Olympus said it will concentrate sales efforts on major cities where the mirrorless segment is expected to expand, and will “accelerate investment in sales channels highly suited to mirrorless cameras.”

Olympus said it will reduce imaging business staff by 30 percent by March 2014 compared with March 2012 levels, and will significantly reorganize sales systems by consolidating overseas sales bases, and efficiently reducing sales channels.

Sasa projected earnings after reduction of the compact camera business to decrease from 57.2 billion yen for the year ended March 2013 to 40.2 billion yen in March 2014. Mirrorless cameras are forecast to climb from 37.8 billion yen in March 2013 to 50 billion yen, as the IC recorder business rises from 12.5 billion yen in fiscal 2012 to 13.7 billion yen.

Net sales from imaging are forecast to decline from 107.6 billion yen in March 2013 to 104 billion for the year ending March 2014.