Olympus 2015 Annual Report Download - page 24

market. To cut R&D expenditures, we will once again curtail
the number of new models to be developed with regard to
both mirrorless cameras and compact cameras. In terms of
manufacturing, we will transition away from the use of original
equipment manufacturers (OEMs) to a system centered on
in-house production. This will enable us to make fine-tuned
adjustments to production levels based on changes in market
conditions, and thereby minimize inventory risks. In addition,
we are shifting production from our plant in China, where labor
costs are on the rise, to our Vietnam plant with the aim of
lowering manufacturing costs. With regard to sales, we will
substantially limit promotion expenses by narrowing the scope
of sales plans to only include focus products and market
segments while advancing efficient sales measures tailored
to the characteristics of specific regions.
3. Reallocate Management Resources
Based on the Companywide policy of investing management
resources in high-growth fields, we are reallocating resources
currently associated with the Imaging Business to other busi-
ness fields. As part of this effort, Olympus’ superior optical,
image processing, and wireless and mobile communications
technologies—all areas of strength for the Imaging Business—
will be utilized throughout the Company. Furthermore,
automobile-mounted camera, security camera, and other
BtoB operations will be transferred to the newly established
Business Development Office to accelerate their expansion.
Review of Business Segments
2013/3 2014/3 2016/3
(Forecast)
2015/3
0
250
500
750
1,000
2012/3 2013/3 2014/3 2015/3
0
20
10
30
40
50
Mirrorless Camera Sales Volumes
(Thousand units)
Mirrorless Camera Sales by Region
(¥ Billion)
Plan Results Japan North America Europe Asia, Oceania and Others
Overview of Fiscal 2015
Amid the rapid contraction of the camera market following
the spread of smartphones, we continued to advance the
shift from compact cameras to mirrorless cameras.
Sales of mirrorless cameras were up year on year due to
growth in sales of the OM-D series in Europe as well as the
fact that a larger portion of sales came from high-priced
models. Another contributor to higher sales was the favorable
sales of interchangeable lens products. Conversely, overall
sales in the Imaging Business were down as we reduced sales
volumes of compact cameras in preparation for the future
contraction of the camera market.
Operating loss showed a substantial year-on-year in-
crease. The harsh market environment forced us to lower
selling prices of mirrorless cameras, and write-downs on
inventories were recorded as a result of strict revaluation. In
addition, investments were carried out to expand automobile-
mounted camera and other BtoB operations. While we
worked to reduce costs through structural reforms, these
efforts could not absorb the impact of the aforementioned
income detractors.
Structural Reforms
1. Revise Mirrorless Camera Sales Expansion Plans and
Prioritize Operating Income Improvements
The basic policy for the Imaging Business is risk minimization,
and we have greatly reduced the scale of compact camera
operations while accelerating the shift toward highly profitable
mirrorless cameras in accordance with this policy. A number
of measures have been implemented to transform the Imaging
Business into a profitable business, including cutting costs by
consolidating manufacturing sites, reducing inventory costs,
decreasing R&D expenditures by curtailing the development of
models, and utilizing sales channels in a more efficient manner.
These measures have born results, as production adjust-
ments and inventory reductions have contributed to a mas-
sive improvement in earnings in compact camera operations,
which have previously been a major factor behind the overall
losses recorded in the Imaging Business.
In the future, we will make conservative estimates about
the operating environment for mirrorless camera operations as
well, and will revise business plans based on the assumption
that the market will not expand, placing operating income
improvements as our top priority. At the same time, we will
pursue heightened business efficiency by advancing a shift
instrategies centered on the cross-business reallocation of
management resources.
2. Institute Measures to Reduce Costs
In order to respond to market changes in the Imaging Busi-
ness,
we instituted drastic reforms to cost structures, including
a massive reorganization of manufacturing sites and the cur-
tailment of compact camera model development. Looking
ahead, we will implement even-more extensive measures to
reduce development, manufacturing, and sales costs in prep-
aration for further contraction risks in the mirrorless camera
2014/3 2015/3 2016/3 (Forecast) Change
Net sales 96.1 83.8 70.0 (13.8)
SLR cameras
(mirrorless) 42.8 49.8 47.3 (2.6)
Preparation for mirrorless camera market
contraction risks
(scale on unit basis: 510,000 → 480,000)
Compact cameras 40.8 19.6 13.0 (6.6) Reduction of sales volume targets in conjunction
with further market contraction (780,000 → 480,000)
Others 12.5 14.5 9.8 (4.7)
Gross prot 42.2 32.6 29.6 (3.0)
Improvement in operating margin of 3 percentage
points, to 39%, due to manufacturing cost and
inventory reductions
SG&A expenses 51.3 46.5 29.6 (16.9)
・
Reduction in R&D expenditures, manufacturing
investments, and promotion expenses due to
narrowing of product lineup
・
Cost reductions from revision of regional sales
strategies (reduction of personnel, advertising,
and promotion expenses)
・
Transference of BtoB operations to the newly
established Business Development Office
・
Reassignment of certain Companywide-applicable
R&D topics to corporate R&D Group
Operating loss (9.2) (13.9) 0 13.9 Improvement of operating income
1. Cutting-Edge Imaging Technologies Utilized
in the Medical Business and the Scientific
Solutions Business
One of largest draws of mirrorless cameras is the ability to select the optimal
interchangeable lens for the scene that the photographer seeks to capture.
Olympus’ interchangeable lens products are a culmination of its traditional optical
technologies, advanced precision technologies, and reliability technologies forged
by experienced lens-crafting specialists. These cutting-edge imaging technolo-
gies are also utilized in high-precision microscopes and endoscopes.
2. Launch of OLYMPUS OM-D E-M5 Mark II
Top-class OM-D image quality and OM-D Movie in hand-held shooting
Launched in February 2015, the OLYMPUS OM-D E-M5 Mark II, our new flagship mirrorless camera, is
equipped with a new, evolved 5-axis image stabilization function capable of eliminating all types of blurring. This
stabilization function allows photographs to be taken without fear of blurring with no need for a tripod. Moreover,
this holds true under any conditions, whether photographing in the dark, taking pictures of far-off subjects, or
even when recording video.
TOPICS
Based on a conservative estimate for growth in the mirrorless
camera market, we have placed our fiscal 2016 sales volume fore-
casts for these cameras at the same level as was achieved in fiscal
2015, and will work to limit inventory risks.
Investment will be concentrated on the focus regions of Japan,
Europe, and Asia, where sales of mirrorless cameras are particularly
high. We aim to secure profits in these operations by increasing selling
prices and strengthening sales of interchangeable lens products to
boost overall sales while also conducting efficient sales activities.
Factors Projected to Improve Income in Fiscal 2016 Billions of yen
45
OLYMPUS Annual Report 2015
44 OLYMPUS Annual Report 2015
Performance and Strategies by Business