Latest Olympus Financial Results

The parade of quarterly financial presentations continues in Japan, with Olympus next up (Panasonic, Sony, and Nikon have already made their reports). In particular, Olympus' numbers will get a lot of scrutiny because of their stated de-emphasis on compact camera sales and increased emphasis on mirrorless. Surviving this transition is critical for the Imaging Group at Olympus to remain viable.

Overall, Imaging Group sales were down 16% year-to-year, and profitability went down as well, to a loss for the quarter. Olympus has taken to reporting year-to-year percentages after yen appreciation; the Imaging Group sales went down 11% when adjusted this way (as opposed to their biggest business, medical equipment, which went up 6% when measured this way). 

Olympus claims that mirrorless camera unit volume went up 11%, net sales dollars up 50%. They further make the point that current quarter results were up from the historical bottom, but they conveniently leave off the 2011/2 4Q numbers from the graph they use to show upward movement. Both year-to-year and quarter-to-quarter patterns are necessary to clearly show that the worst is over. Indeed, if you look closely at their graph, you'll see that the second quarter for this year (July through September) is forecast as still being slightly lower than the second quarter of last year, and reporting about the same level of loss. Thus "improving steadily" is a deceptive heading for this data. One could also say last year's three similar quarters "improved steadily," but I wouldn't consider them a strong showing.

Olympus has now reported four consecutive quarters of loss in Imaging, with another one forecast ahead. They do forecast a small profit for the full year, with increased overall sales. Curiously, Olympus took the time to call out another factor they haven't before: digital camera inventories went up 1.4 billion yen in one month. I believe this is partially a restatement based upon audit, not a massive production effort or sales decline. Overall, Olympus is reporting their lowest overall camera market share, 6%, which is a result of Olympus' sales shrinking faster than the market.

In terms of Olympus living up to past claims, they are still forecasting the same net sales for Imaging in the coming year, which is good news. But remember one claim they made: that they would increase mirrorless sales by 180% by 2017. With a just reported 11% year-to-year gain, they would need to press the accelerator down a lot more, as that level of increase, if sustained, would take them over a decade to hit their stated goal. With Canon now having entered the market, the job just got tougher.

The good news is that things are improving, and Olympus says OM-D sales were at the core of their mirrorless sales increase. Olympus aficionados, including me, are breathing just a bit easier these days as the company seems to have a plan for moving ahead and not ditching the Imaging Group.  

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