Nikon 1998 Annual Report Download - page 15

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Operating Environment
In fiscal 1998, ended March 31, 1998, demand in the United States remained buoyant thanks to strong consumer spending and
capital investment, while the economies of Europe staged an overall recovery in advance of the impending European Community
currency unification. However, financial and currency crises in certain countries in Asia dampened economic growth in the region.
In Japan, the increasing instability of the financial system and the downward trend in public-sector capital investment, along with a drop
in consumer spending and housing starts in the wake of a rise in the consumption tax rate toward the end of the fiscal term, succeeded
in pushing the economy further into recession.
In consumer products, the positive effects of the yen’s depreciation helped boost sales of such products as cameras and oph-
thalmic equipment in overseas markets. However, the domestic market remained severe as a result of strong price competition. In
addition, sales of industrial instruments, including semiconductor manufacturing related equipment, microscopes, and measuring
equipment remained hampered by a lackluster market for semiconductors and constraints on investment in capital equipment.
Operational Review and Analysis
In fiscal 1998, consolidated net sales fell 1.8%, or ¥6.9 billion, to ¥372.1 billion. During the fiscal year, the Nikon Group worked to
strengthen and expand its manufacturing, sales, and service functions, endeavored to develop new products and technologies,
reorganized both management and overall organizational structures with the aim of increasing the efficiency and speed of opera-
tions, and implemented a number of programs to improve productivity across the board. Despite these efforts, net income in fiscal
1998 dropped 58.3%, or ¥11.6 billion, to ¥8.3 billion, amid an increasingly harsh operating environment.
By industry segment, while sales in consumer products operations decreased a slight 0.8%, to ¥130.2 billion, operating income
amounted to ¥2.3 billion, a substantial improvement compared with the previous fiscal year. Sales of industrial instruments fell
2.4%, to ¥241.8 billion, with operating income in this division totaling ¥25.1 billion.
By geographic segment, sales in Japan dropped 1.6%, to ¥317.2 billion, and operating income totaled ¥17.7 billion. Overseas
sales rose 6.4%, to ¥159.1 billion, and operating income reached ¥11.8 billion.
Net Sales by Industry Segment
For the years ended March 31, 1998, 1997 and 1996 (Millions of Yen, %)
1998 1997 1996
Consumer products ¥130,266 ¥131,282 ¥106,918
Share of net sales 35.0% 34.6% 32.1%
Industrial instruments 241,879 247,806 225,881
Share of net sales 65.0 65.4 67.9
Total ¥372,145 ¥379,089 ¥332,799
Non-Consolidated Net Sales by Sector
This breakdown is provided as an approximate indication of the share of non-consolidated net sales by sector.
For the years ended March 31, 1998, 1997 and 1996 (% of Non-Consolidated Net Sales)
1998 1997 1996
Cameras 26.8% 23.6% 21.3%
Ophthalmic products 5.6 5.5 5.7
Semiconductor manufacturing related equipment 53.5 57.6 60.6
Microscopes and measuring instruments 8.0 6.7 6.4
Surveying instruments and others 6.1 6.6 6.0
Regional Breakdown of Non-Consolidated Net Sales
This breakdown is provided for reference only.
For the years ended March 31, 1998, 1997 and 1996 (% of Non-Consolidated Net Sales)
1998 1997 1996
Domestic 43.6% 46.7% 49.2%
Export (total): 56.4 53.3 50.8
North America 22.1 15.5 15.4
Europe 14.4 15.4 11.7
Asia and Oceania 19.8 22.3 23.6
Other areas 0.1 0.1 0.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS
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