Brexit drop in Yen adds further pain to Japanese Camera Manufactures

Friday 24th June 2016 saw yet another body blow to the Japanese Camera Industry. With global markets in turmoil the Yen gained against both the Euro and Dollar. This of course is exactly what the manufacturers didn’t want. 2016 had already been a challenging year in terms of exchange rate and this would reverse any improvements.

What the Industry needed was a lower Yen exchange rate to boost the important export markets. Since Feb 2016 the exchange rate had been moving against them but just before that fateful Friday it had started to make some improvements. Now that lay in tatters as the outcome of the ‘Brexit’ referendum became clear.

To get a sense of the scale of the problem, during the 2015/6 financial year, Nikon accounts had the US Dollar at ¥120/$ and the Euro at ¥133/€. These two major markets and important for any growth when the Asian markets are receding. Already Nikon had estimated the exchange rates for 2016/7 would rise to US Dollar at ¥110/$ and the Euro at ¥123/€ and wiping out ¥50.6B or 6% from their Net ¥ Sales.

What we have seen on Friday is a rise to US Dollar at ¥102.2/$ and the Euro at ¥113.6/€. Trading has just begun on Monday morning and it continues to worsen with US Dollar at ¥101.8/$ and the Euro at ¥112.3/€.

This worsening of market conditions comes at a time when the Digital Camera Market is already predicted to fall 6% before the production problems caused by the recent earthquakes had kicked in. As a result Nikon had forecast a -15% sales reduction and -23% operating income reduction. The final reality is likely to be much worse.

Nikon shares ended down -6.4% on Friday, Canon ended down -5.7%, Olympus down -8.4%, FujiFilm -8.2%, Sony shares -8.0% and Panasonic down -8.3%.

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