Nikon: FY2027 operating profit forecast raised 50% to ¥16.5bn

Nikon now expects first-half operating profit of ¥9 billion for FY2027, up ¥14.5 billion from its previous forecast. Revenue is forecast to fall ¥1.5 billion short of the prior outlook but rise from the year-earlier result, with the company projecting a ==return to first-half operating profit==.

Revenue is forecast to be 0.4% below the previous estimate, while operating profit and pretax profit are expected to swing from losses to profits. Compared with the year-earlier period, revenue is also expected to increase, and both operating and pretax profit are projected to turn positive. Interim profit attributable to owners of the parent is forecast to rise from ¥5.356 billion a year earlier.

Nikon cut its full-year revenue forecast by ¥10 billion but raised operating profit by ¥5.5 billion and profit attributable to owners of the parent by ¥6 billion. Operating profit is now forecast to rise 50.0% from the previous estimate and net profit 60.0%, with both expected to return to positive territory after substantial losses in the previous year.

Revenue is forecast to be 1.4% below the previous estimate but above the prior-year result. Operating profit, pretax profit and net profit are all forecast above the previous estimates, and Nikon expects to move back into profit after the prior year's losses. The profit upgrades more than offset the revenue downgrade.

The improved first-half profit outlook reflects stronger-than-expected service revenue in the Precision Equipment business and cost controls, among other factors. For the full year, Nikon raised profit forecasts for Precision Equipment, Healthcare and Industrial Metrology based on first-half performance.

• Precision Equipment: Service revenue is expected to exceed forecasts, supported by strong semiconductor market conditions.
• Costs: Selling, general and administrative expenses are expected to decline due to cost controls and the postponement of some spending.
• U.S. factors: Tariff refunds and other factors are expected to boost first-half profit.
• Full-year business outlook: Nikon raised profit forecasts for Precision Equipment, Healthcare and Industrial Metrology.
• Imaging Products: A revision to the second-half sales plan led to the full-year revenue forecast cut.

Profit improvement reflects service revenue as well as changes in spending timing and tariff refunds. A key question for the durability of the earnings upgrade is whether the revised profit outlooks for each business remain on track in the second half.

Nikon kept its foreign-exchange assumptions for the third quarter onward unchanged from its previous announcement at ¥155 to the U.S. dollar and ¥180 to the euro. The full-year revision does not reflect a change in currency assumptions, but instead revised profit outlooks by business and a new sales plan for Imaging Products.

Although profit forecasts have improved, the revenue outlook has been lowered, so the earnings recovery may not be driven by increased sales volumes. Investors will be watching second-half Imaging Products sales and whether the upgraded profit outlooks for the three businesses translate into results.