R&I and JCR, Japan’s two biggest credit rating agencies, recently affirmed Nikon’s credit rating at A and A+, respectively. Here are two quotes from the agency’s rationale:
Nikon Corp. is an optical equipment manufacturer with two earnings pillars: the Imaging Products business, which mainly handles digital cameras, and the Precision Equipment business, which offers lithography systems for flat panel display and semiconductor manufacturing. Although the company is exposed to high industry risk in both businesses, it commands high market shares. Its earnings base is robust, supported by technical capability and strong brand recognition. In light of the benefits of fixed cost reduction including a workforce reduction, R&I views that the company will likely maintain earning capacity even in face of a certain demand contraction. The company has ample equity capital and is in a net cash position. It has financial resilience for making investments for growth. (source:R&I)
Its core Imaging Products Business is facing shrinking markets for digital SLR cameras, interchangeable lenses and compact digital cameras. In the semiconductor equipment business, it became clear that a competitor’s ArF immersion lithography systems have more competitive edge than the Company’s ones in which the Company has been intensively putting management resources. That said, the Company’s overall business performance is picking up through structural reform, including revamping its business strategy. The operating income is expected to increase in FY2018, driven by FPD equipment business. Furthermore, strong financial base has been established, bolstered by accumulated net income in the previous fiscal year and its consistent cash flow management. Taking the above into consideration, JCR affirmed the ratings on the Company and retained Stable outlook. (source: JCR)
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