Nikon returns to black

TOKYO - Japan's Nikon Corp said on Monday it was back in the black in the latest quarter on strong demand for equipment used to make liquid crystal displays (LCD) and a high-end digital camera, and left its outlook unchanged.

Driving the turnaround was its stepper operations, which returned to profitability in the October-December quarter thanks to robust capital spending by LCD manufacturers and Nikon's efforts to shorten lead times and reduce labour costs.

Nikon is one of the world's three major makers of steppers, which are used to project circuitry onto semiconductors and LCDs. It competes with Dutch-based ASML and Canon in chip steppers and Canon in LCD machines.

The company said group operating profit came to 5.9 billion yen ($81 million) in the three months to December 31, compared with an operating loss of 7.4 billion yen in the quarter a year earlier. Sales rose 27 per cent to 153.7 billion yen.

Nikon's precision equipment division, mainly LCD and chip steppers, produced an operating profit of 4.7 billion yen in the nine months to Dec. 31, compared with a 20.7 billion yen loss in the same period last year when chip spending was very weak.

"Capital investment for chip steppers and LCD lithography equipment has been on a recovery track," Nikon Managing Director Mamoru Kajiwara told a news conference.

In the digital camera market, Nikon suffered from intense competition in compact models but enjoyed robust demand for the "D70", a digital single-lens reflex (SLR) launched in March, and interchangeable lenses sold with or for digital SLRs.

Operating profit in Nikon's imaging products division, composed of cameras and interchangeable lenses, came to 1.7 billion yen in the third quarter, falling about 10 per cent even though the division's sales jumped 25 per cent year-on-year.

Kajiwara suggested it might be difficult to meet the firm's forecast for the imaging division to generate an operating profit of 19 billion yen in the full year to March 31, although it stood by its digital camera sales target at 6.6 million units.

Nikon sold 5.4 million digital cameras in 2003/04.

"There is a chance that LCD stepper sales will come in above our expectations, but increasing competition in compact digital cameras could have a slight effect on profits in the imaging division," Kajiwara said.

The company reiterated its forecast for LCD stepper sales of 85 units in 2004/05, up from 52 in 2003/04. It also maintained its annual outlook for new semiconductor stepper sales at 210 units, up sharply from 159 machines in the previous year.

Nikon's net profit in the third quarter totalled 15.6 billion yen, inflated by payments from ASML and German lens maker Carl Zeiss to settle a patent dispute related to steppers. Nikon had a net loss of 4.9 billion yen in the third quarter last year.

The company maintained its annual forecasts for an operating profit of 28.0 billion yen and a net profit of 28.6 billion yen on sales of 660 billion yen.

Prior to the announcement, shares of Nikon rose 2.21 per cent to 1,386 yen. The benchmark Nikkei average gained 1.23 per cent.

- REUTERS