Nikon’s Latest Financial Statements Warn of “Extraordinary Losses” Due To Covid-19

Nikon’s Latest Financial Statements Warn of “Extraordinary Losses” Due To Covid-19

This week Nikon Corp released two financial statements recognizing, and warning investors of “extraordinary losses” related to the COVID-19 Pandemic and a revised Fiscal Year 2020 financial forecast that shows what Nikon’s expected impact on revenue and profits for the fiscal year that ended in March.

Let’s have a look at both statements below;

NIKON CORPORATION (hereinafter “the Company”) expects to post extraordinary losses and to reverse a part of deferred tax assets in its non-consolidated financial statements, which are prepared in accordance with Japanese GAAP, for the fiscal year ended March 31, 2020.

Using the future plan that reflects the impact and more caused by the spread of COVID-19 to business activities, the Company has assessed an indication that fixed assets may be impaired, performed valuation of financial assets, and examined the recoverability of deferred tax assets.

As a result, the Company has decided to post an impairment loss of 5.7 billion yen for the fixed assets held by Imaging Product Business. And for Nikon Metrology NV, the Company’s consolidated subsidiary, a loss on valuation of the investments in subsidiaries and affiliates and provision for loss on business of subsidiaries and affiliates will be recognized 6.7 billion yen and 9.2 billion yen, respectively. The Company has also decided to reverse a part of deferred tax assets and post deferred tax expenses of 20.6 billion yen. However, the losses associated with the subsidiary mentioned above will have no impact on the consolidated financial results, as those losses will be eliminated in the consolidated financial statements.

[Related Reading: Coronavirus: 10 Pieces of Business & Financial Advice for All Photographers]

Nikon also released the following to go along with the above statement;

Notice Regarding Revision of the Consolidated Financial Forecast for the Fiscal Year Ended March 31, 2020 and Recognition of Impairment Losses

This is to announce that the consolidated financial forecast announced on February 6, 2020 is revised as below, reflecting our recent business performance trend, and to disclose that impairment losses are expected to be recognized.

  1. Revision of the Consolidated Financial Forecast
    1. Nikon Consolidated financial Forecast 2020Revised Consolidated Financial Forecast for the Fiscal Year Ended March 31, 2020 (From April 1, 2019 to March 31, 2020)
  2. Reason for Revision of the Consolidated Financial Forecast
    1. Decrease in revenue is expected due to factors such as the delay in installations of FPD lithography system, affected by the spread of COVID-19. In addition, operating profit, profit before income taxes and profit attributable to owners of the parent are also expected to be lower than the previous forecast due to the recognition of impairment losses of 11.1 billion yen for non-current assets, as indicated below in “3. The Recognition of Impairment Losses.” Based on these situations, the consolidated financial forecast announced on February 6, 2020 is revised as above.
  3. Recognition of Impairment Losses
    1. For the fiscal year ended March 31, 2020, indication of impairment for non-current assets was examined based on its future utilization and the impact caused by the spread of COVID-19 on business operations. As a result of measuring the recoverable amount of the cash-generating units in which impairment was indicated, a sufficient recoverable amount was not estimated in the Imaging Products Business and the Industrial Metrology Business and Others. Therefore, impairment losses of 11.1 billion yen are to be recognized. In the Imaging Products Business,
      impairment losses of 7.5 billion yen mainly for property, plant and equipment and intangible assets are to be recognized. In the Industrial Metrology Business and Others, impairment losses of 3.6 billion yen mainly for goodwill, property, plant and equipment and intangible assets are to be recognized.

*Forecast in this disclosure is made by management in light of information currently available. A number of factors could cause actual results to differ materially from those disclosed as above.

Our Thoughts On The Financial Statements From Nikon

We should keep in mind that these reports mean nothing overall until we hear Sony and Canon’s other COVID-related financial impact reports, too. In other words, it’s going to be really bad all across the board, but that’s not unique to the camera industry, either. We all know that everyone from entry-level employees to large corporations are in an unprecedented situation. If Nikon’s losses are roughly in keeping with everybody else’s, then hopefully we’ll all weather this storm together, and we’ll see if 2021 has more to offer.

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