Nikon Corp. :NINOY-US: Earnings Analysis: Q3, 2017 By the Numbers : February 15, 2017

Nikon Corp. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Nikon Corp. – Canon Inc. Sponsored ADR, Konica Minolta, Inc., ASML Holding NV ADR and Ricoh Company, Ltd. Sponsored ADR (CAJ-US, KNCAF-US, ASML-US and RICOY-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 2,028.29 million, Net Earnings of USD -169.56 million.
  • Gross margins widened from 39.95% to 40.43% compared to the same period last year, operating (EBITDA) margins now 12.23% from 10.63%.
  • Year-on-year change in operating cash flow of 73.83% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from 6.45% to 8.49%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 2028.29 1704.12 1569.31 1781.9 1851.64
Revenue Growth (%YOY) 9.54 -1.48 5.02 -11.7 -10.93
Earnings (mil) -169.56 61.07 106.44 6.34 84.11
Earnings Growth (%YOY) -301.6 -6.55 292.86 -53.82 47.48
Net Margin (%) -8.36 3.58 6.78 0.36 4.54
EPS -0.43 0.15 0.27 0.02 0.21
Return on Equity (%) -14.12 4.88 8.73 0.53 7.14
Return on Assets (%) -7.38 2.66 4.92 0.3 4.01

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Market Share Versus Profits

Revenues History
Earnings History

NINOY-US‘s change in revenue this period compared to the same period last year of 9.54% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that NINOY-US is holding onto its market share. Also, for comparison purposes, revenues changed by 19.02% and earnings by -377.64% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 39.95% to 40.43%, while operating margins improved from 10.63% to 12.23% over this period. For comparison, gross margins were 39.92% and EBITDA margins 9.45% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

NINOY-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 159.85, compared to last year’s level of 145.26 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

NINOY-US‘s change in operating cash flow of 73.83% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from 6.45% to 8.49%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from 6.37% to -4.95%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Nikon Corp. engages in the manufacture and sale of optical instruments. It operates through the following segments: Precision Equipment, Imaging Products, Instruments, and Others. The Precision Equipment segment covers products and services related to integrated circuit and liquid crystal display steppers. The Imaging Products segment manufactures and sells imaging products and peripherals such as digital single-lens reflex cameras, compact digital cameras, and interchangeable camera lenses. The Instruments segment offers microscopes, measuring, and inspection equipment. The Others segment includes glass, sport optics, and customized products. The company was founded by Koyata Iwasaki on July 25, 1917 and is headquartered in Tokyo, Japan.

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