Prime Minister Shinzo Abe’s
weakening of the yen is capping Nikon Corp. (7731)’s borrowing costs
even as camera shipments shrink due to competition from devices
such as Apple Inc.’s iPhone.
Nikon raised 20 billion yen ($194 million) in a bond sale
on March 7 that included 10-year notes priced at a 24 basis
point premium over government debt. That’s two basis points more
than the record low in its previous offering of similar-maturity
securities in January 2011. Japanese borrowers pay an average
spread of 19 basis points for debentures due in seven years to a
decade, while U.S. corporates offer 148, Bank of America Merrill
Lynch indexes show.
The race to add more sophisticated lenses and sensors by
smartphone makers such as Apple and Samsung Electronics Co. has
eroded demand for traditional point-and-shoots and is
threatening the high-end market for single-lens reflex cameras.
Nikon last month reiterated its forecast for an 18 percent
increase in annual net income, citing a currency windfall
helping offset worse-than-expected demand in China and Europe.
“A weakening yen versus the dollar and euro is one factor
supporting improved earnings this fiscal year,†said Takao
Matsuzaka, a credit analyst in Tokyo at Daiwa Securities Co.
“The environment surrounding the camera business is severe and
Nikon’s dependence on it remains high.â€
Photographer: Kiyoshi Ota/Bloomberg
An attendee looks at Nikon Corp. cameras and lenses on display at the CP+ Camera and… Read More
An attendee looks at Nikon Corp. cameras and lenses on display at the CP+ Camera and Photo Imaging Show in Yokohama, Kanagawa Prefecture, Japan. Close
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Photographer: Kiyoshi Ota/Bloomberg
An attendee looks at Nikon Corp. cameras and lenses on display at the CP+ Camera and Photo Imaging Show in Yokohama, Kanagawa Prefecture, Japan.
Net income at the company will probably climb to 50 billion
yen in the year to March 31, even as sales remain little changed
at about 1.02 trillion yen, Nikon said on Feb. 6. The Tokyo-based manufacturer of Coolpix and D800 cameras said it expects
to meet the 20 billion yen in targeted savings this year and
that it’s boosting the profitability of its camera business amid
a “favorable exchange rate.â€
Yen’s Boost
Currency fluctuations contributed 27.8 billion yen to
Nikon’s operating profit of 39.3 billion yen in the nine months
to Dec. 31, it said. The yen plunged 11 percent against the
dollar in the period and declined 17 percent versus the euro
amid Prime Minister Abe’s stimulus policies backed by about 7
trillion yen in monthly bond purchases by the Bank of Japan. It
traded at 103.31 per dollar and 143.31 per euro as of 10:08 a.m.
in Tokyo today.
“The interest rate environment is favorable and we
received strong demand for the offering,†said Ryota Satake, a
spokesman for Nikon. “We were able to sell the bonds at the
lower end of the marketing range.â€
Bond Demand
The offering, split between the 10-year bonds and debt due
in eight years, was marketed at a spread of as much as 27 basis
points and 24 basis points respectively, a person familiar with
the matter said on March 4. The 0.652 percent 2022 securities
priced at a yield premium of 20 basis points, or 0.2 percentage
point, data compiled by Bloomberg show.
Investors demanded a 19 basis point extra yield over
government debt to own Nikon’s 1.434 percent notes due 2021,
down from 22 at the time of offering in 2011. Japan’s benchmark
10-year bonds yielded 0.625 percent today.
“That Nikon could sell 10-year bonds at such a tight
premium is a sign that the company’s business model is
considered quite unique, and that investors put value on that,â€
said Yusuke Ueda, a Tokyo-based credit analyst at Bank of
America Merrill Lynch. “Nikon is financially a strong company
and there are few concerns from a credit perspective.â€
The company is rated A+ by Japan Credit Rating Agency Ltd.,
its fifth-highest investment grade rating, and one level lower
by Rating Investment Information Inc. It isn’t rated by
Moody’s Investors Service or Standard Poor’s.
Camera Slump
Annual sales of compact digital cameras will fall 33
percent from a year earlier to 11.5 million units, while those
of the SLR variety will slump 14 percent to 6 million, Nikon
forecasts. The business, which also includes interchangeable
lenses, accounts for about 75 percent of the company’s revenue.
Its operating profit margin was 11 percent in the third quarter.
Canon Inc., the world’s largest camera maker, missed
estimates for annual net income in January when it forecast 240
billion yen, compared with a 267 billion yen average of 22
analysts compiled by Bloomberg.
For its fiscal first quarter ended Dec. 28, Apple said it
sold a record 51 million iPhones, the company’s biggest source
of revenue. Global mobile phone shipments increased 5 percent
last year to 1.7 billion, led by Samsung’s 451.7 million,
according to researcher Strategy Analytics. Apple shipped a
record 153.4 million mobile phones, the data show.
“The low-cost digital camera market is shrinking rapidly
as smartphones can cover that segment,†Bank of America Merrill
Lynch’s Ueda said. “The profit margins in the imaging business
are quite high, leaving sufficient room to endure a squeeze.â€
To contact the reporter on this story:
Finbarr Flynn in Tokyo at
fflynn3@bloomberg.net
To contact the editors responsible for this story:
Katrina Nicholas at
knicholas2@bloomberg.net;
Sandy Hendry at
shendry@bloomberg.net
Pavel Alpeyev, Ken McCallum
Article source: http://truthdive.com/2013/04/21/nikon-launches-new-coolpix-cameras-in-india-prices-start-from-rs-4990.html
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