| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6771.6B | ¥7152.9B | -5.3% |
| Operating Income / Operating Profit | ¥-1124.5B | ¥24.2B | -93.9% |
| Profit Before Tax | ¥-1065.1B | ¥45.3B | -89.4% |
| Net Income / Net Profit | ¥-860.4B | ¥61.2B | -80.9% |
| ROE | -14.6% | 1.0% | - |
For the fiscal year ended March 2026 (FY2026), Nikon recorded a large loss due to impairment losses of ¥991B. Revenue was ¥6,772B (YoY -¥381B, -5.3%), operating loss was ¥1,124B (YoY -¥1,149B), ordinary/profit before tax loss was ¥180B (YoY -¥204B), and net loss attributable to owners of the parent was ¥860B (YoY -¥922B). Declining sales and a lower gross margin (40.9%, down -2.7pt from 43.6% a year earlier), together with other operating expenses of ¥1,112B (prior year ¥166B), pressured profitability. The impairment in the Digital Manufacturing Business (¥906B) was the largest factor, but the Precision Equipment Business’s revenue decline of 17.2% and operating loss of ¥46B, plus inventory buildup (¥3,329B, YoY +8.2%), highlight fragility in core earning power. Operating Cash Flow was ¥-44B, indicating weakened cash generation; Free Cash Flow was ¥-170B, insufficient to cover dividends of ¥164B from internal funds. The equity ratio remained at 54.6%, preserving the financial base, but retained earnings decreased by ¥940B to ¥4,192B (prior year ¥5,131B). FY2027 full-year guidance targets revenue ¥7,400B (+9.3%), operating income ¥100B, and net income attributable to owners of the parent ¥100B, planning a return to profitability.
[Revenue] Revenue ¥6,772B (YoY -5.3%). By segment: Imaging Business ¥2,901B (-1.8%) held firm centered on high-value interchangeable lenses and cameras; Precision Equipment Business ¥1,673B (-17.2%) posted a large decline due to weak demand for FPD exposure equipment and semiconductor exposure equipment. Healthcare Business ¥1,119B (-3.9%) saw slowing life-science demand such as biological microscopes. Components Business ¥762B (+2.8%) benefited from robust industrial equipment and optical components. Digital Manufacturing Business ¥281B (+20.3%) saw increased orders for metal 3D printers. By geography: U.S. ¥1,663B (-10.3%) and Other ¥1,187B (-17.0%) declined, while Europe ¥1,213B (+5.0%) and China ¥1,705B (+0.5%) were broadly flat. The business mix remains structurally exposed to Precision Equipment market cycles, and growth in Digital Manufacturing (contribution 4.1% of revenue) did not materially support consolidated earnings.
[Profit & Loss] Cost of goods sold ¥3,999B (prior ¥4,033B) yielded gross profit ¥2,773B and a gross margin of 40.9% (down -2.7pt from 43.6%). SG&A ¥2,892B (prior ¥2,952B) was reduced by ¥60B, but other operating expenses surged to ¥1,112B (prior ¥166B), leading to an operating loss of ¥1,124B. Other operating expenses comprised impairment losses ¥991B (Digital Manufacturing ¥906B, Precision Equipment ¥58B, etc.) and restructuring costs ¥74B (Imaging ¥32B, Precision Equipment ¥9B, Components ¥7B, etc.). Segment operating profit/(loss) was: Imaging ¥167B (prior ¥413B), Precision Equipment ¥-46B (prior ¥15B), Healthcare ¥16B (prior ¥67B), Components ¥96B (prior ¥72B), Digital Manufacturing ¥-1,063B (prior ¥-152B). Non-operating items included equity-method investment income ¥43B and financial income ¥92B, resulting in ordinary loss ¥180B. Deferred tax asset recognition and other items produced tax benefit of ¥205B, and net loss attributable to owners of the parent was ¥860B. In summary, lower sales and margins plus one-off impairment items generated a large operating loss.
Imaging Business: Revenue ¥2,901B (YoY -1.8%), operating income ¥167B (YoY -59.5%) with an operating margin of 5.8%. Despite absorbing restructuring costs of ¥32B, profits were halved from the prior year. Precision Equipment Business: Revenue ¥1,673B (-17.2%), operating loss ¥46B (prior operating income ¥15B), operating margin -2.7%. Weak demand for FPD exposure equipment and an impairment of ¥58B led to a swing to loss. Healthcare Business: Revenue ¥1,119B (-3.9%), operating income ¥16B (-76.8%), operating margin 1.4%; life-science and eye-care growth underperformed, materially reducing profitability. Components Business: Revenue ¥762B (+2.8%), operating income ¥96B (+33.0%), operating margin 12.5%; industrial equipment and optical components performed well and were the only segment with both revenue and profit growth. Digital Manufacturing Business: Revenue ¥281B (+20.3%), operating loss ¥1,063B (prior ¥-152B), operating margin -378.4%; a large impairment of ¥906B significantly damaged consolidated results. After deducting growth-investment-related costs ¥179B and corporate management costs ¥132B, consolidated operating loss was ¥1,124B.
[Profitability] Operating margin -16.6% (prior 0.3%) markedly deteriorated due to impairment; gross margin 40.9% (prior 43.6%) down -2.7pt. ROE -14.1% (prior 0.9%), net profit margin -12.7% (prior 0.9%) show sharp profitability decline. [Cash Quality] Operating Cash Flow ¥-44B (prior ¥483B), Operating CF / Net Income 0.05x (prior 7.9x) indicating weakened cash conversion of earnings. Days inventory outstanding 304 days (prior 279 days) demonstrates serious inventory buildup, pressuring working capital. [Investment Efficiency] Total asset turnover 0.63x (prior 0.64x), receivables days 69 days (prior 64 days) showing slight deceleration. Inventory expansion to ¥3,329B (prior ¥3,075B) impairs efficiency. [Financial Soundness] Equity ratio 54.6% (prior 57.4%), debt-to-equity ratio 0.83x (prior 0.74x) remain in a safe zone, but interest-bearing debt increased to ¥2,200B (prior ¥1,936B). Current ratio 197%, cash and deposits ¥1,580B secure short-term liquidity. Retained earnings fell to ¥4,192B (prior ¥5,131B), a material decline that may constrain future shareholder returns and investment capacity.
Operating CF was ¥-44B (prior ¥483B). A pre-tax loss of ¥1,065B was adjusted for depreciation ¥431B and impairment losses ¥991B; working capital movements included inventory increase -¥128B, accounts payable decrease -¥108B, and customer advances decrease -¥27B, which were negative contributors. Cash outflows included corporate tax payments -¥120B, interest payments -¥34B, and lease payments -¥81B, accelerating cash outflow. Investing CF was -¥126B: capital expenditure -¥365B and intangible asset investment -¥192B were partially offset by proceeds from sales of investment securities ¥357B and property sales ¥53B. Free CF was -¥170B, insufficient to cover dividends of ¥164B. Financing CF was ¥+9B: increased short-term borrowings ¥351B and long-term borrowings ¥160B offset bond redemptions -¥100B, long-term borrowings repayments -¥156B, and dividends -¥164B. Including foreign exchange translation effects +¥106B, cash decreased by ¥56B to ¥1,580B. Early recovery of cash generation is a precondition for sustaining shareholder returns and continued investment.
The gap between ordinary loss ¥-180B and net loss ¥-860B is limited, supported by tax benefit ¥205B. Non-operating items included equity-method investment income ¥43B and financial income ¥92B (dividends and FX gains, etc.), partly offset by financial expenses ¥75B. Of other operating expenses ¥1,112B, impairment losses ¥991B (centered on Digital Manufacturing ¥906B) are temporary, but restructuring costs ¥74B may persist. Comprehensive income was ¥-348B versus net loss ¥-860B, reflecting other comprehensive income +¥512B (foreign currency translation adjustments of overseas operations +¥368B, fair value changes of financial assets +¥121B, etc.). Operating CF ¥-44B versus net loss ¥-860B and operating-CF subtotal (before working-capital changes) ¥30B indicate extremely weak cash generation. Even excluding one-off impairments, earnings quality has structurally deteriorated due to declining gross margin and inventory buildup; improving core business profitability is essential.
FY2027 full-year guidance: Revenue ¥7,400B (YoY +9.3%), operating income ¥100B (return to profit from prior ¥-1,124B), net income attributable to owners of the parent ¥100B (recovery from ¥-860B), EPS ¥30.36, dividend ¥10. Assuming progress in the first half, the plan expects substantial earnings improvement in the second half. The return-to-profit assumptions include inventory normalization (compression of ¥3,329B), demand recovery in Precision Equipment, improved profitability in Healthcare, and Digital Manufacturing breaking its breakeven point (business restructuring after impairment). To improve operating margin to 1.4% (prior -16.6%), recovery of gross margin (through product mix and easing of discount pressure) and further fixed-cost reductions are required. Achieving the plan depends on visible order trends in the first half and progress in inventory reduction. The dividend guidance ¥10 (prior year actual ¥40) is conservative and prioritizes consistency with Free CF generation.
This period’s dividends were interim ¥25 and year-end ¥15, total ¥40, and payout ratio is arithmetically indeterminate due to a net loss. Total dividends ¥165B versus Free CF ¥-170B indicate dividends were funded by prior retained earnings and short-term financing. Historical payout ratio was 2.8% (prior year, profitable year), showing a policy emphasizing stable dividends. FY2027 forecast dividend ¥10 (implying payout ratio 33% versus forecast EPS ¥30.36) is cautious, prioritizing internal reserves while assuming profit recovery. Share repurchases were ¥-0.0B (CF) this period, compared with ¥-300B in the prior year—none executed this fiscal year. Total return ratio is currently not calculable; clarification of post-recovery return policy (mix of dividends and buybacks, target return ratio, etc.) will be key to stabilizing shareholder expectations. Cash and deposits ¥1,580B and equity ¥5,882B indicate financial capacity to continue dividends, but sustainable shareholder returns require recovery in Free CF generation.
Delay in monetizing the Digital Manufacturing Business: The company recorded operating loss ¥1,063B (including impairment ¥906B) and completed a large reassessment of business assets. Future order growth and achieving the breakeven point are essential, but demand uncertainty in the metal 3D printer market and intensified competition could prolong the period before revenue ¥281B (4.1% of sales) meaningfully contributes to consolidated earnings. Progress delays in reducing losses in this business are a risk to meeting FY2027 profitability targets.
Inventory buildup and gross margin pressure: Inventories ¥3,329B (YoY +¥253B, +8.2%), days inventory outstanding 304 days (prior 279 days) indicate serious buildup. One driver of the gross margin decline to 40.9% (from 43.6%) is inventory valuation and deterioration in sales mix. Discount-driven sales or additional valuation losses would further reduce gross margin and worsen operating CF. Delays in inventory normalization threaten the FY2027 margin improvement scenario.
Precision Equipment market dependence and earnings volatility: Revenue ¥1,673B (YoY -17.2%), operating loss ¥46B (prior operating income ¥15B) show that earnings are highly sensitive to cycles in FPD and semiconductor exposure equipment. Order backlog and customer advances are uncertain; the FY2027 recovery scenario assumes market improvement. Prolonged market weakness would necessitate structural reforms in Precision Equipment (fixed-cost cuts, business reorganization) and could incur additional costs.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | -14.1% | 6.3% (3.2%–9.9%) | -20.4pt |
| Operating Margin | -16.6% | 7.8% (4.6%–12.3%) | -24.4pt |
| Net Profit Margin | -12.7% | 5.2% (2.3%–8.2%) | -17.9pt |
Profitability metrics are well below the manufacturing industry median due to impairment recognition, placing the company in the lower tier within the industry. Improving gross margins in core businesses and cutting fixed costs are keys to industry-level recovery.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -5.3% | 3.7% (-0.4%–9.3%) | -9.0pt |
Revenue growth lags the median by 9.0pt, impacted by Precision Equipment cyclicality and contraction in Imaging. Growth in Components (+2.8%) and Digital Manufacturing (+20.3%) has not yet materially contributed to overall company growth.
※ Source: Company compilation
Visibility on execution of the FY2027 return-to-profit plan: The targets of revenue ¥7,400B (+9.3%) and operating income ¥100B hinge on inventory normalization (compression of ¥3,329B), recovery in Precision Equipment orders, and improved profitability in Digital Manufacturing. Early indicators will be first-half order trends, inventory reduction progress, and the degree of gross margin rebound. Continued growth in Components (operating income ¥96B, +33.0%) could provide downside support to consolidated earnings.
Structural improvement in inventory and gross margin: Pace of normalization in days inventory outstanding (304 days vs 279 days prior) and recovery in gross margin (40.9% vs 43.6% prior) will determine operating and free cash generation. Quarterly monitoring of inventory levels, accounts payable and customer advances, and any occurrences of discounting or valuation losses will be key.
Sustainability of shareholder returns: Dividend guidance ¥10 (prior ¥40) is conservative; resumption of dividend increases depends on Free CF recovery. The reduction in retained earnings to ¥4,192B (prior ¥5,131B) and Free CF turnaround post-FY2027 will determine medium-to-long-term return capacity. A resumption of share buybacks would likely follow profit and cash recovery and merits attention as a post-recovery capital policy.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statement data. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.