Olympus Results

(news & commentary) Updated

Olympus reported their full fiscal year results today (May 9th), and the news is grim for the Imaging group. I’ve updated my overall article about the industry on dslrbodies.com and my Claims to Remember on this site, but let me give you the short version:

  • Olympus failed to meet their m4/3 camera expectations. They missed their own mirrorless sales forecast by 41%. In terms of actual unit volume, the original estimate for mirrorless was originally 660k units for the year. That dropped all the way down to 610k units during the year. Actual sales were 510k units [source: Olympus Q&A], which is below last year’s mirrorless sales by Olympus (540k units). This represents almost exactly a 15% share of the CIPA mirrorless shipment numbers for the same period.
  • Olympus lost money at cameras (again). It’s been a bit of a broken record: Olympus would forecast break-even for the group, then the results would indicate that they didn’t make it. This year, they didn’t make it by 4.2b yen. For the first time I can remember, they’ve given a negative assessment for the coming year: they expect another significant loss in the coming year. 
  • One third of the cameras Olympus is selling are going into Japan, and that was down 5%. All other markets were down in double digits. 
  • SG&A costs are still above 50%. Overhead, marketing and selling those cameras costs them more than making them does.  
  • Olympus will sell less in the coming year than last. Going by their forecasts, they are still in a declining position in terms of overall sales numbers, though they ascribe most of that to a huge reduction in compact camera sales. If I’m reading the numbers right, Olympus expects to sell about 1.5m total cameras in the coming year. Under my most optimistic forecast for total global camera sales, that represents 3.5% of the market; under CIPA’s current forecast, that represents 3.1%.
  • Olympus sold 40,000 EM-10’s in the first quarter. This was half what they expected, due to manufacturing delays. So they still would have missed their unit goal significantly (550k implied).
  • Olympus plans on growth in the coming year with m4/3. Once again they gave a number in the low 600k’s as the plan, with 40% in the first half of the year, 60% in the second. 
  • Olympus has significant m4/3 inventory. 250,000 units in inventory [source: Q&A], which is basically half what they sold in the last fiscal year.
  • “We used to focus on Pen; we’re now going to focus on OM-D.” Direct quote from the Q&A, and the reason given for that is “attach rate for lenses.” In other words, OM-D buyers buy more lenses. Also there was this: 140% increase in OM-D sales 4th quarter of current year versus 4th quarter of previous year (though note that there was one model last year versus three this year). Trying to couple all their unit statistics together, I believe that Olympus is saying that OM-D is already more than half their m4/3 sales during the past year, though it’s a little tricky to get to that number, as you have to infer a number of things from what they did say.

Make of that what you will. My take is that Olympus simply hasn’t cracked the code that will make them money and grow their camera business. That’s a shame, because the EM-1 and EM-10 are very nice cameras (reviews coming), and Olympus has a fine set of lenses. 

Update: on dpreview someone pointed out that they had bought a Saturn and despite that auto maker going out of business, they still had the car. A very good point. An E-M1 today is a camera that can last you quite a long while, I think. The danger for Olympus is that people start dismissing them as a possible choice because they might go out of the camera business. So let me point out that this is highly unlikely. The much more likely scenario is what happened at Pentax or Sony. In Pentax’ case and in the case of Sony’s computer business: new owners. In Sony’s TV division: a spin-out company. Japanese businesses don’t tend to go Chapter 7 (liquidation), nor do they tend to shut down divisions due to labor laws. The primary way businesses are restructured there is via making them into separate businesses, and in so doing, jettisoning facilities, personnel, and overhead. Olympus is not in real danger as a company, but there’s increasing pressure on them from shareholders to do something about the Imaging group’s continued losses. That’s because it’s draining profit from the larger and very viable medical group they have at a time when Olympus is also diluting shares and likely to continue to do so to settle lawsuits from when they hid significant losses for over a decade. 

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