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Nikon, Konica Profit Jumps, But Outlook Is Flat

Nikon said its annual profit rose 53.2%, helped by strong sales of advanced cameras and lenses, but expects a slight fall this year as flat-panel makers squeeze spending on equipment.

Precision-equipment maker Konica Minolta also posted a 25% profit rise on robust color copier shipments but forecast flat growth this year, while Casio Computer expects another year of double-digit percentage growth in profit on the back of its ultra-slim digital cameras.

Though Nikon expects continued success for its digital single-lens reflex (DSLR) cameras, it may face a tough year in its stepper business amid a price slump in liquid-crystal displays and competition from its Dutch rival ASML. Steppers are machines that print circuitry onto semiconductors.

Nikon's operating profit was 102 billion yen ($849.8 million) in the year ended March 31, up from 66.6 billion yen a year earlier, beating the average estimate of 99.1 billion yen from 18 analysts surveyed by Reuters Estimates.

For the year started in April, Nikon forecasts profit to fall 2% to 100 billion yen, while analysts predict an average 100.9 billion yen.

"In the past, our overall profits used to drop when there was a slump in the silicon cycle, but we've come to a point where we can offset the decline in LCD steppers with contributions from other businesses", like cameras and chip steppers, Nikon Chief Financial Officer Ichiro Terato told reporters.

Nikon expects LCD stepper shipments to drop to 40 units this year from 80 units in 2006/7, while shipments of new chip steppers are forecast to rise to 165 units this year from 158.

Nikon said it expected the overall market for LCD steppers to drop to about 70 units in calendar year 2007, from 125 units a year earlier, while the market for new chip steppers may also shrink to about 510 units this year from 571 in 2006.

New Steppers

Tokyo-based Nikon and ASML are betting on their newest products, called immersion steppers, which use water between the lens and the silicon wafer to project finer details on a chip.

Nikon expects immersion steppers to make up 13% of its total chip stepper shipments this year, up from about 4 percent a year earlier. This year will also be the debut of its newest chip stepper, called EUVL, Nikon said.

Nikon also mapped out a new mid-term business plan, in which the firm aims to lift annual sales by 22% to 1 trillion yen in three years through March 2010. It forecasts operating profit to jump 23% to 125 billion yen in the same period.

In digital cameras, Nikon failed to deliver hit compact models last year, losing the world's number five spot to South Korea's Samsung Electronics, which jumped from ninth place.

But Nikon enjoyed a very successful year in the more profitable DSLR models, where Canon and Nikon control more than 80% global market share.

In 2006/7, Nikon saw its DSLR shipments jump 56% to 2.09 million units, and expects to ship 2.5 million units this year. Higher DSLR sales also fuelled demand for removable lenses, which have higher margins than camera bodies.

Shipment in compact models fell 17% to 5.9 million in the year, but the company expects that to recover to 7.5 million units in the year ending March 2008.

Color Boom

Konica Minolta, which competes against Canon in office equipment, said operating profit was 104 billion yen, and expects that to rise to 105 billion yen this business year.

Konica Minolta, which has led the shift to color copiers, enjoys hefty returns on higher sales of toner cartridges, and also saw higher sales of films used in LCDs, where it stands against market leader Fujifilm Holdings.

"Shipments of color copiers were strong in Europe, where it rose 52% in the year just ended," Yasuo Matsumoto, a Konica Minolta director told reporters. "But big U.S. firms are still hesitant to go color. That's our next challenge."

Matsumoto also said shipments of LCD films were expected to rise this year. Though the price of the specialized material is expected to fall further, Konica Minolta aims to earn profit from the business by focusing on higher-end products, he said.

Casio, also a mobile phone maker, said operating profit rose 11.5% to 48.1 billion yen in 2006/7, helped by strong demand for its digital cameras, and expects that to rise to 53 billion yen this year.