Olympus 2014 Annual Report Download - page 22

Challenges and Business Strategies
Going forward, we will accelerate the shift toward mirror-
less cameras, specifi cally the high-value-added OM-D
series. We will also step up the risk minimization measures
that proved effective in reducing losses during fi scal 2014.
By further scaling back compact camera operations and
stringently managing SG&A expenses, we aim to realize a
substantial reduction in operating loss in fi scal 2015.
(Billions of yen)
2013/3 2014/3 2015/3 (Forecasts) Change
Net sales 107.6 96.1 97.0 +0.9
SLR cameras
(mirrorless) 37.7 42.8 59.5 +16.7 • Expand sales volumes centered on OM-D series
• Increase average selling prices
Compact
cameras 57.4 40.8 20.0 (20.8)
Decrease sales volume targets in anticipation
of future market contraction
(Compact camera sales volume target:
2,710,000 units 1,000,000 units)
Others 12.5 12.5 17.5 +5.0
Gross pro t 32.6 42.2 45.2 +3.0
• Lower cost of sales (logistics, inventories,
quality, etc.)
• Increase mirrorless camera sales ratio
(Percent of net sales accounted for by mirrorless cameras:
44% 61%)
SG&A expenses 55.7 51.3 48.7 (2.6)
Cut SG&A expenses by reducing number
of models to be developed, improving sales
channel effi ciency, etc.
Operating loss (23.1) (9.2) (3.5) +5.7 Forecast to break even if upfront investment
of ¥3.5 billion in BtoB operations is excluded
Share of Net Sales for Mirrorless and Compact Cameras
(¥ Billion)
TOPICS
Pursue Expansion of BtoB Operations
To respond to the risk of the mirrorless camera market shrinking,
we will pursue the expansion of BtoB operations over the long
term. We have already established many business relationships
in which we sell Olympus lens modules directly to other com-
panies. In addition, we believe there are latent customers for
such transactions in the Scientifi c Solutions Business and the
Medical Business. Furthermore, the Company’s sophisticated
optical technologies and manufacturing technologies have the
potential to be adapted to a variety of products and systems.
By adapting these technologies to meet market needs,
Olympus will be able to take advantage of a wider range
ofbusiness opportunities.
In fi scal 2015, we will conduct upfront investments
totaling ¥3.5 billion in our BtoB operations, which we hope to
grow into a business with sales to the extent of ¥20 billion.
A specialized BtoB sales force has already been created, and
Priority Measures Based on Growth Strategies
Minimize Risks
The mirrorless camera market is expanding on a monetary
basis. However, risks in the Imaging Business are increas-
ing due to such factors as the shrinking compact camera
market and changes in the distribution environment. To
address these risks, we will step up the implementation
of risk management measures while revising our business
strategies as deemed necessary.
In the rapidly contracting compact camera market, we
have reduced our sales volume targets, and we are only
targeting sales volumes of 1 million units in fi scal 2015,
approximately 60% less than was recorded in fi scal 2014.
Compact camera risk management measures are advancing
in line with plans, as demonstrated by the near completion
of the elimination of low-priced compact camera inventories,
which were a major factor behind profi tability declines. At the
same time, we are pursuing further profi tability improvements
through more exhaustive cost-cutting measures. For example,
we are increasing manufacturing effi ciency, reducing inven-
tory costs, decreasing R&D expenditures by curtailing the
development of models, and utilizing sales channels in a
more effi cient manner.
However, when looked at from a long-term perspec-
tive, there is a risk that the mirrorless camera market will
contract. For this reason, we are revising the business
portfolio of the Imaging Business so as to have a greater
proportion of BtoB operations supplement its traditional
business-to-customer operations. Over the long term,
we will work to build a stable earnings foundation in the
Imaging Business by fully leveraging the technologies born
out of digital camera development and gradually increasing
the ratio of BtoB operations in our business portfolio.
Expand Sales of High-Margin Mirrorless Cameras
In mirrorless cameras, we are shifting our focus toward the
OM-D series. This series of high-value-added models is
core to our mirrorless camera lineup and will be a priority
target for sales promotion investments going forward. By
utilizing the fl agship OM-D E-M1 model and the accessibly
priced OM-D E-M10 model, we aim to expand our market
share by syphoning business from the conventional digital
SLR camera market. In addition, we have nearly completed
the elimination of low-priced compact camera inventories.
We are now positioned to concentrate our sales force on
mirrorless cameras and thereby boost sales of OM-D and
PEN series cameras.
60%
49%
25%
2013/3 2014/3 2015/3
(Forecast)
0
20
40
60
80
100
40%
75%
51%
Mirrorless camera sales exceed compact camera
sales for fi rst time in fi scal 2014
Mirrorless Camera Portfolio by Price Range
Earnings Improvement Forecasts for Fiscal 2015
High-priced
Mid-priced
Low-priced
Growth Fields
PENOM-D
Expand lineup
Market trending toward sales of older models
and discount items
Olympus refrains from dealing in
low-margin, low-priced items
E-M1
E-M5 E-P5
E-M10 E-PL6
E-PL5
we plan to strengthen these operations into the future, with
businesses involving automobile-mounted cameras and security
cameras being considered as possible options.
* Artist renditions
Review of Business Segments
Compact cameras Mirrorless cameras
41
OLYMPUS Annual Report 2014
40 OLYMPUS Annual Report 2014