Nikon 2011 Annual Report Download - page 26

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Financial Section
Management’s Discussion and Analysis
Nikon Corporation and Consolidated Subsidiaries
For the year ended March 31, 2011
Business Environment
There were many bright spots in the business environment
during the consolidated fiscal year ended March 31, 2011,
including recovery in the production goods market, strong
expansion of the imaging products market both in Japan
and overseas and an increase in capital expenditures in the
industrial instruments field.
These developments had a positive effect on business
conditions for the Nikon Group’s businesses as well. In the
Precision Equipment Business segment, the recovery in
global demand for semiconductor devices led to an increase
in unit sales for both IC and LCD steppers and scanners,
with a considerable rise in revenue that restored profitability
in the business.
In the Imaging Products Business, the market for digital
SLR cameras grew steadily in all regions, with expansion
in the market for high-end products as well. Demand for
compact digital cameras continued to rise throughout the
fiscal year, centered on emerging markets. The business
was able to overcome appreciation of the yen and the impact
from the March 11 Great East Japan Earthquake to achieve
increases in both revenue and earnings.
In the Instruments Business, sales of products in the
bioscience field were affected by government budget cuts,
but revenue rose in the industrial instruments on greater
investment in semiconductor equipment, as well as in
the electric and electronics components industry field on
strong capital expenditures both in Japan and overseas.
The business managed to narrow its losses as a result.
Operations at certain facilities were suspended as a
result of the earthquake and tsunami, but Nikon made
a concerted recovery effort as a corporate group, and
resumed operations at all plants during March.
Financial Performance
The Nikon Group improved its earnings foundation by
optimizing inventories and enhancing its tolerance for a
strong yen, while also introducing products in a timely manner
in line with the market recovery. As a result, consolidated
net sales for the subject fiscal year increased ¥102,014
million (13.0%) from the previous fiscal year to ¥887,513
million. Operating income amounted to ¥54,053 million
(compared to an operating loss of ¥13,854 million in the
previous fiscal year), and net income totaled ¥27,313 million
(compared to a net loss of ¥12,615 million). Basic net income
per share was ¥68.90.
Performance by Business Segment
Business Segment Results
In the Precision Equipment Business segment, unit sales of
IC steppers and scanners rose 2.5 times, and LCD steppers
and scanners by 50% (both on a year-on-year basis) on
rising demand for capital investment among semiconductor
companies. In the market for IC steppers and scanners,
Nikon expanded sales for leading-edge equipment models,
including the NSR-S610C ArF immersion scanner, as well as
the NSR-S620D ArF immersion scanner, which is capable of
the double patterning that allows for the mass production
of semiconductors with line widths of 32 nm and beyond.
In the area of LCD steppers and scanners, Nikon captured
demand for manufacturing the LCD panels used in large
LCD displays, smartphones and tablet computers. We also
took steps to strengthen our business foundation by
Income (Loss) Analysis
Years ended March 31, 2010 and 2011 % of Net Sales
2010 2011
Net sales 100.0% 100.0%
Cost of sales (70.3) (64.8)
Gross profit 29.7 35.2
SG&A expenses (31.4) (29.1)
Operating income (loss) (1.7) 6.1
Net interest expense and dividend income 0.0 0.0
Net other expenses (0.5) (0.9)
Income (loss) before income taxes (2.2) 5.2
Income taxes 0.6 (2.1)
Net income attributable to minority interests 3.1
Net income (loss) (1.6) 3.1
Note: Expenses, losses and subtractive amounts are in parentheses.