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Mixed results from manufacturers

While 2020 has been a bad year for sales of cameras and lenses, with Covid adding to the woes of a sector already grappling with inroads from smartphones, the latest shipment and financial data shows that some camera makers have cause for optimism. Nikon is not among them.

CIPA Camera September
Shipments of Interchangeable Lens Cameras, January-September (Source: CIPA)

 

While the graph above is a dramatic illustration of the decline this year in camera shipments, the Covid shutdown around the world makes 2020 an outlier. A comparison with the previous year’s results are less useful than in a normal year. The big uptick in shipments in September, with another to follow in October if CIPA’s production figures are a guide, could optimistically be interpreted as the worst of the carnage being behind us.

Mirrorless cameras continue to replace DSLRs and are now well over 50 percent of the market. There were 1.56 million DSLRs shipped in the first nine months of 2020 compared to 1.81 million mirrorless models. The contrast in the value of those shipments underscores that dominance: While DSLR shipments are put at 65 billion yen, mirrorless is worth well over twice that figure, at 146 billion yen.

Canon fires up
Canon’s most recent financial report on its Imaging group – which covers the same Jan-Sept time frame as the CIPA figures- is one of the more upbeat from the company in recent years.

It even upgraded forecasts for the final quarter slightly after revising them down in the midst of the Covid crisis: As for camera demand, amid ongoing market contraction, we expect a significant drop in demand due to COVID-19 this year. However, in the third quarter, the camera market was stronger than expected thanks to a gradual increase in image capturing opportunities as people became more active. Taking this into account, we raised our full-year projection for the interchangeable-lens camera market by 0.5 million units to 5.9 million units. Although we expect our full-year sales to decline in line with the market to 2.7 million units, the EOS R5 and EOS R6, new cameras equipped with full-frame sensors that we launched in the third quarter, have recorded strong sales since their introduction thanks to the high marks they have received for their revolutionary video recording function, AF performance, and image stabilizing function. Furthermore, for our enhanced lineup of lenses, we are achieving sales growth and improving product mix through synergy with camera bodies.

In addition to shifting to high value-added interchangeable-lens cameras like the EOS R5, we will expand sales of other cameras based on new design concepts that actively incorporate the various ideas of our young employees. A recent example of this is the PowerShot Zoom, a hand held camera that combines the functions of a telescope and camera. We started crowdfunding this camera on a Japanese site in September. This gave us access to a new user base that was able to make advance purchase reservations for a limited number of cameras which was reached soon after we started taking orders. We will deploy this kind of product strategy and focus on improving profitability by streamlining product development, production, and market in preparation for decreasing sales.

Elsewhere in the report it’s noted: Although total Imaging System sales declined, we did post a significant increase in profit, returning profitability to a double-digit level.

Demand for printers
Although it’s a bit of a sidebar, it’s also worth noting that after years of consumer indifference, inkjet printers are selling again, due in part to Covid: …We are seeing a recovery in printer demand thanks to robust demand in developed countries where remote working and online learning persist, and a gradual rebound in economic activity in emerging markets. Under this situation, we have been able to significantly grow sales of both hardware and consumables, posting an overall increase of more than 20 percent in the third quarter. Furthermore, triggered by COVID-19, we are seeing an increase in daily home printing opportunities, particularly in developed countries. From this, we see future demand for inkjet printers to become more stable. Taking into account this kind of change in the business environment, we have commercialized products that allow users to easily print company documents from home as well as print online learning material directly from the printer without using a computer. By expanding the number of products that raise the convenience of home printing and enhancing our lineup of refillable ink tank models for emerging markets, we will capture diverse printing demand.

Fujifilm is another camera maker to have not fared too badly under the circumstances, with sales picking up in the July-September quarter. In fact Instax camera sales – although measured separately from digital cameras – actually improved compared to the same quarter the previous year.

For the six months from April-September Fujifilm sold 31 billion yen’s worth of cameras, compared to 37 billion in sales in the same period in 2019 – a relatively modest fall of 16.5 percent: In the electronic imaging business, besides the severe climate in the digital camera market overall, the COVID-19 pandemic, which caused fewer opportunities to take photographs as a result of temporary store closures and restrictions on outings, depressed revenue. However, sales of FUJIFILM X-T4, which has been acclaimed for its high-speed auto-focus and excellent video features, and other models have been brisk.

…Operating income was down, but if COVID-19 impacts are excluded, the segment secured income of a similar level to last year.

Sony’s half-yearly results (April – September) have also recently landed. In a depressed market in which it also supplies sensors for a range of its competitors, Covid has delivered something of a double whack to Sony, with both image sensor and camera sales down.

Cameras are now lumped in with televisions, smartphones and other consumer electronics products, while image sensors are in another business unit (which isn’t very convenient when putting together an overview like this!)

Cameras take a share of the blame for falling sales in the electronic products business unit: Sales decreased 140.9 billion yen year-on-year to 836.5 billion yen. This significant decrease in sales was due to a decrease in unit sales of digital cameras, Audio and Video and broadcast- and professional-use products resulting primarily from the impact of COVID-19. Operating income decreased 21.6 billion yen year-on-year to 44.9 billion yen due to the above-mentioned decrease in sales, partially offset by reductions in operating costs.

Nonetheless, in the second quarter, camera sales were increasing: ‘If we exclude Mobile Communications, the category that was the greatest contributor to sales and profit growth in the 2nd Quarter was televisions, followed by digital cameras,’ a Sony spokesperson told analysts and investors in late October.

Over at Nikon they would kill for that kind of operating profit. And kind of operating profit, actually. The Imaging Products business in its first half (April – September) has delivered a devastatingly poor result: While there was a recovery trend from sluggish demand due to the spread of COVID-19, the market continued to shrink and unit sales declined. As a result, revenue for the Imaging Products Business decreased by 45.9% year on year to 64,400 million yen.

The Group revised future plans considering the acceleration of the market shrinkage and thus recorded impairment losses on non-current assets, resulting in an operating loss of 27,415 million yen (operating profit of 2,026 million yen in the same period of the previous fiscal year.)

So Nikon lost 27 billion yen on sales of 64 billion yen!

For the first half of the year (April-September) the Nikon scorecard is not a pretty sight: It has sold just 380,000 interchangeable lens cameras, 120,000 compact cameras, and 610,000 lenses, which is a drop of 52.05, 76 and 53 percent compared to the previous year. We are all going through a difficult year, but Nikon’s is diabolical. The worry is that it is running behind Sony, Canon, Fuji and Olympus in mirrorless camera sales – so the success or failure of the Z series cameras, particularly the entry level Z5, will be critical for Nikon. It may even decide the future of camera making at Nikon.

Nikon has also announced measures to reduce costs. It will cut 2000 employees – around 20 percent of the international workforce – in non-Japanese markets by March 2022, according to a Nikkei article.

Manufacture of camera bodies will move from Miyagi, Japan, to Thailand, and the company will focus on cameras for professional and high-end enthusiasts. But hang on a bit – isn’t ‘Made in Japan’ one of the traditional brand attributes particularly valued by professionals and knowledgeable enthusiasts? In striving to cut costs by moving its factory to a lower cost country, will Nikon cut sales instead?

Optics are bad
While Sony suffers from falling image sensor sales due to the depressed camera market, lens makers also rely on camera sales to drive growth, and Tamron, in spite of putting out some cracking high-performance, budget-friendly lenses recently, is also in trouble.

According to another Nikkei report, it is looking for 200 voluntary retirements from its two Japanese factories, or about 40 percent of its Japanese factory workforce.

Tamron has forecast income for the year to be down 58 percent to 2.2 billion yen, with the decline blamed on that plug-ugly virus.

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