Message from the CEO

日本語

August 2024

Since I was appointed Representative Director and Chairman in June 2019, Nikon has made steady progress despite being faced by such serious situations as the impact of the global spread of COVID-19 and the emergence of geopolitical risk, and during that five years the Company has achieved commensurate results. This is due to the cooperation and support of our stakeholders, for which I am truly grateful.
Yet there are still many challenges to overcome for further growth. We need to raise the capabilities of the Nikon Group to the next level through revenue and risk management at domestic and overseas investee companies, the strengthening of internal control, and the promotion of global compliance. To address these issues, in April 2024 we transitioned to a management structure under which Muneaki Tokunari, who as CFO has driven company-wide strategies from a perspective beyond finance, serves as President, COO and CFO, and under which I serve as Chairman, CEO.
Both Mr. Tokunari and I will work hand-in-hand to achieve the goals of the Medium-Term Management Plan and further growth beyond.

An overview of the Medium-Term Management Plan

In April 2022, we announced our Medium-Term Management Plan, covering the four years from FY2022 to FY2025, in which we first imagined our Vision 2030, set targets to be achieved by 2025, and then formulated strategies and measures to make the plan a reality.

Progress in Medium-Term Management Plan

As of the end of fiscal year 2023, progress has been satisfactory, as represented by the way in which we achieved the 700.0 billion yen revenue target for the final year of the Plan of two years ahead of schedule. In the above period, we have expanded the number of growth drivers through the acquisition of such companies as leading metal 3D printer manufacturer SLM Solutions Group AG (now Nikon SLM Solutions AG; hereinafter “SLM”) and digital cinema camera manufacturer RED.com, LLC (hereinafter “RED”).

Going forward, our policy will be to review growth investments and expand investments in organic growth, while strengthening our management base.

Excluding one-time costs associated with the relocation of the headquarters, the outlook for earnings in FY2024 is for operating profit of 40.0 billion yen, the same level as in FY2023. As we approach FY2025, the final year of the Medium-Term Management Plan, we expect to maintain high earnings in the Imaging Products Business while achieving improvements in profits in the other four businesses, with the aim of reaching an ROE of 8% or higher.

Progress by business

Imaging Products Business

The Imaging Products Business saw strong sales of the new Z 8 and Z f models, which deploy leading-edge functionality from the flagship Z 9 mirrorless camera, and sales volumes of interchangeable lens-type digital cameras and interchangeable lenses also increased. Going forward, we plan to continue launching products for the mid/high-end market for professionals and hobbyists, where our policy is to appeal not only to core fans but also to increase new users and especially younger users. In the market for video equipment, which is expected to expand going forward, we will provide new value by leveraging the cutting-edge technology of RED, which has widespread support in Hollywood and elsewhere for professional use, with the aim of expanding our business and acquiring new sources of revenue.

Healthcare Business

In the Healthcare Business we are working to develop a business among private-sector companies for biological microscopes, which come under Life sciences, a segment that accounts for approximately 60% of sales. We are aiming to increase the ratio of high-priced system microscopes to more than 40% of sales. In the Drug discovery support service, we are expanding the number of applications and promoting DX in pathology diagnosis, with the goal of using this to increase sales of microscopes. In Contract Cell Development and Manufacturing, we have contracted a broad range of customer projects from big pharma to regenerative medicine ventures, and commercialization has begun in several such cases. In Eye care, in combination with fundus cameras, a market in which we have a global share of more than 30%, we plan to achieve stable revenues of around 100.0 billion yen from three businesses, with operating profit of around 10.0 billion yen.

Precision Equipment Business

In the Precision Equipment Business, we made progress in growing sales of new models of high-definition, high-productivity FPD lithography systems, and expanded our share in South Korea and China. In semiconductor lithography systems, we are experiencing success in diversifying our customer base in Japan and Asia, in addition to our major customer in North America. Our plan for both FPD and semiconductor lithography systems is to leverage the installed base to secure steady revenue from maintenance, relocation, and other service businesses. We will continue to promote model renewals to reinforce the product portfolio, with the aim of expanding the business over the medium to long term.

Components Business

In the Components Business, upgrading and miniaturization of semiconductor-related products has led to increasing adoption by customers of Nikon's optical and EUV-related components. In April 2024 we integrated the Industrial Metrology Business Unit and the Digital Solutions Business Unit, which are closely related in terms of customer segments and products, to form the new Industrial Solutions Business Unit. By merging the measurement/examination equipment business into the Components, we will strengthen global structure to deliver solutions integrated end-products, service and components, and will expand the area of business.

Digital Manufacturing Business

In the Digital Manufacturing Business, we secured over 150 customers with the SLM acquisition. Going forward, we will leverage the application development foothold we have built in the US, which is the largest market, and focus on expanding sales, mainly in defense and aerospace, of SLM's high-speed, high-precision metal 3D printers, which are particularly competitive in the area of molding large parts.
The Digital Manufacturing Business aims to record a profit at the EBITDA level in FY2025 and become profitable at the operating level in FY2026.

Progress in strengthening business fundamentals

Supporting the expansion of the business over the medium to long term requires strengthening of the management base. In addition to making steady progress in the implementation of human capital management and the execution of the sustainability strategy, we are concentrating on investing in DX and manufacturing, and strengthening group executive management.

1. *DEI = Diversity, Equity & Inclusion
2. *1THE USE BY NIKON CORPORATION OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF NIKON CORPORATION BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED ‘AS-IS’ AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.

Sustainability strategy

Nikon has been highly rated by external organizations for its activities to promote sustainability. In terms of materialities, with regard to society and labor, the Company formulated the Nikon Global Diversity, Equity & Inclusion Policy in April 2023, and is working to foster working environments and company culture where the characteristics and abilities of all team members are accepted and valued.
In the area of the environment, the percentage of reductions in greenhouse gas and utilization ratios for renewable energy are both exceeding the levels targeted in the Medium-Term Management Plan. To reflect this, we have brought forward the target year for using 100% renewable energy from FY2050 to FY2030.
Going forward, we aim to achieve sustainability while contributing to a sustainable society.

Human capital management

Human resources are essential for realizing our Vision 2030. At Nikon, we have integrated and promote our management and human resource strategies through the three pillars of “Acquiring talent,” “Developing talent,” and “Leveraging talent.” In terms of “Acquiring” human resources, we have added more than 600 personnel for two consecutive years. By offering environments in which each individual can maximize their abilities and encouraging self-awareness in our employees, we seek to become a company in which independent human resources are developed and play active roles.

DX with a focus on customers and employees

Regarding the promotion of DX, we will not only focus on acquiring DX talent but also strengthen our digital marketing functions, and we are working to open an integrated B2B website that spans our businesses. We are also investing around 30.0 billion yen up to 2030 and have begun to renew our backbone systems.

Manufacturing

The origin of Nikon lies in manufacturing. In order to provide robust support for the company-wide strategy of earnings expansion, Nikon will make even greater efforts to enhance its production footprint. With the business environment changing significantly and the various businesses seeing increasingly large fluctuations in demand, we will invest around 100.0 billion yen up to 2030 and move forward with our plans for enhancing the production footprint to create flexible and highly effective factories. In particular, we will increase production capacity of the lenses that are the key to the success of Nikon products.

Executive management

Due to the increase in overseas subsidiaries and companies in which Nikon has invested, bolstering governance of group companies and organizing a global compliance regime has become an urgent matter. We are moving ahead with measures to acquire highly specialized human resources and put in place organizational structures to strengthen the second and third lines of defense.
We also intend to further enhance the effectiveness of corporate governance.

Realizing our Vision

Since its establishment in 1917, Nikon has been on a quest to uncover the potential of light and has created new value while striving to meet the expectations of our customers and win their trust. In order to provide products and services optimized to meet our customer needs, we will consistently consider what customers really want and deliver solutions integrating end-products, service and components. Under this new management structure, we aim to become “a key technology solutions company in a global society in which humans and machines co-create seamlessly.”