Leica is Healthy, But There's a Surprise

It turns out that Leica's basic financial information is available in some reasonable level of detail with a bit of a delay, even though Leica is a privately held German company. With a little help from a friend in Germany, some dusting off of my college German, and some time in airline clubs with not a lot else to do while waiting for rescheduled flights, I took a look at several of their most recent financial statements to understand what my friend was reporting to me.

Overall, Leica is profitable, and growing modestly (latest report showed 11% year over year overall revenue growth, with a 6.1% growth in their main business, cameras). What's really interesting is that the mix of camera products they've been doing shows why Leica probably does so much model thrash.

Clearly, a lot of their success is in releasing something that resonates with enough people at launch that it makes up for the smallish audience their high-end products tend to have. For example, in the most recently posted year sales of the M line—including lenses if I'm reading things correctly—declined by about one-fifth in value. In glancing through some earlier reports I can see small upticks when major M revisions launched, but very quick decline to lower volume. The latest M10 is likely to reverse the M decline again during the coming year, but one wonders how often Leica can pull off that trick.

Meanwhile, the T decreased in sales by about three quarters in value while the SL increased in that same time period. There also seems to be a strong trend for full frame among Leica purchasers, which explains why cameras like the X-Vario and X-U seemed to disappear from mention so fast. But the T is an interesting case: a one year blip upward in sales, followed by a strong drop downward.

But the really interesting tidbit in looking through the Leica financial postings is that their overall compact camera sales of Panasonic-derived models declined by something less than the CIPA numbers would suggest for the period, though still significantly down. But another compact camera, the Q, is what clearly made Leica's last reported year and caused them to slightly beat their own expectations for that year. More than half of Leica's compact camera sales for that year appeared to have been the Q, and when you throw that into the mix, Leica turns out to bucking the trend: their compact camera business has grown, and grown with a US$4000+ camera.

Of course, the Q is a pretty big compact camera, and I'm using the CIPA definition here of "digital camera with built-in lens." It's hard to argue that a camera that weighs well more than a pound is a "compact." Still, Leica seems to understand where their bread is buttered, and has been managing that area with most of their product development lately.

A few other tidbits that I noted while wandering around the Leica financial documents: North America isn't exactly their hotspot for sales (18% of sales; while Germany alone is something like 13%). The West Hollywood Leica store does seem popular, though ;~). Overall, Europe is the biggest sales region for Leica, with Asia right behind.

When I get a chance I'll take a deeper dive into the Leica reports to see if I can find anything else of interest. But as much as some folk like to claim that Leica is a relic of the past clinging for life, that simply isn't true. It's a profitable, healthy, growing company, though of modest size.

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