Nikon tumbles after cuts to profit forecast
TOKYO, Aug 9 — Nikon Corp shares fell as much as 12 per cent today, a day after the camera maker lowered its full-year operating profit forecast below market expectations to reflect a change in its foreign exchange rate assumption for the euro.
Nikon, which competes with Canon Inc and Sony Corp in digital cameras, cut its euro rate assumption to 100 yen from 105 yen for the year to next March, leading it to lower its annual profit projections, despite maintaining its sales forecasts.
The company, which also makes precision equipment, cut its operating profit guidance by 5.6 per cent to 85 billion yen (RM3.3 billion) for its current business year, below market estimates of about 95.5 billion yen.
Shares of Nikon tumbled in early trade by as much as 11.9 per cent to a six-month low of 2,001 yen, before trimming losses to be down 8.1 per cent at the midday break. The Nikkei 225 average edged up 0.4 per cent.
“The drop in the share price today shows a knee-jerk reaction from investors to guidance being cut, but the move doesn’t actually signify a problem with the company or its actual earnings, it’s merely a revision because of the currency rate,” said Makoto Kikuchi, CEO of Myojo Asset Management.
The euro has weakened against the yen in recent months in line with concerns over euro zone debt and is currently trading at about 97 yen.
The weak euro hurt quarterly profits even after Nikon sold 2.3 million interchangeable lens cameras, the most ever for a quarter, and 4.4 million compact cameras, a record for the April-June period.
For the April-June quarter, Nikon booked an operating profit of 23.4 billion yen, down 36.7 per cent year-on-year, blaming the strong yen and sales expenses.
The company, which makes nearly two-thirds of its revenue from its imaging business, maintained a sales forecast for 10 million interchangeable lens cameras and 18 million compact cameras and in the business year.
Last month, Canon also cut its full-year operating profit outlook citing the European recession. — Reuters