Nikon (7731) Q2 2025 earnings summary

Executive summary

• Revenue for the first half of FY2025/3 rose 0.4% year-on-year to ¥332.7 billion, but operating profit fell 57.3% to ¥5.8 billion and net profit dropped 69.8% to ¥2.9 billion, mainly due to lower semiconductor-related sales, FX losses, and one-time HQ relocation costs.

• Imaging Products outperformed, driven by strong sales of mid- to high-end cameras, offsetting declines in Precision Equipment, Components, and Healthcare, which faced market weakness and delays.

• Management is executing growth strategies, including the acquisition of RED.com, LLC (now RED Digital Cinema, Inc.), and restructuring in components and industrial metrology.

• Full-year revenue forecast revised down by ¥25 billion to ¥725 billion, operating profit by ¥13 billion to ¥22 billion, and net profit by ¥14 billion to ¥16 billion.

• Shareholder returns remain robust, with an annual dividend of ¥55 per share and a share buyback of up to ¥30 billion (8.7% of shares) announced.

Financial highlights

• H1 revenue increased by ¥1.5 billion year-on-year, driven by digital cameras and FPD lithography systems, but operating profit was impacted by one-off relocation expenses and lower semiconductor-related sales.

• 2Q FY2025/3 revenue was ¥168.9 billion (-2.5% YoY), operating profit ¥2.9 billion (-72.3% YoY), and net profit ¥0.2 billion (-97.1% YoY).

• Free cash flow turned positive at ¥7.8 billion in Q2, supported by advance payments and improved operating cash flow.

• 1H operating margin fell to 1.7% (from 4.1% YoY); ROE dropped to 2.4% (from 5.0%).

• FX and investment security valuation losses weighed on net profit.

Outlook and guidance

• Full-year revenue and profit forecasts revised downward due to postponed customer investments in semiconductor and components businesses.

• Imaging Products guidance raised on strong 1H, while Precision Equipment, Healthcare, and Components forecasts were cut.

• Annual dividend maintained at ¥55/share; up to ¥30 billion in share buybacks planned, funded by sale of cross-shareholdings.

• Exchange rate assumptions for H2 unchanged at JPY 145/USD and JPY 155/EUR.

• Metal additive manufacturing demand expected to grow, especially in North America and aerospace/defense.