TOKYO -- Precision-equipment supplier Nikon Corp. on Wednesday said net profit slipped by nearly a quarter in its fiscal first quarter, as an increase in costs wiped out robust sales of its eponymous high-end digital cameras.The Tokyo-based company, which also makes a range of devices including scanners and microscopes, said net profit for the quarter ended June fell to ¥17.95 billion ($165.8 million) from ¥23.45 billion a year earlier.But Nikon left its forecast for net profit for the fiscal year through March unchanged at ¥78 billion, buoyed by a 6.4% increase in revenue despite the strength of the yen that has crimped many Japanese technology exporters, including digital camera rival Canon Inc."Although we are forecasting declines in the fiscal first-half revenue and profits, strength in the second half should make up for it," Executive Vice President Ichiro Terato said at a news conference in Tokyo.Nikon said first-quarter revenue rose to ¥237.9 billion from ¥223.5 billion. Boosted by strong single-lens reflex digital-camera sales, revenue in the cameras division rose 14% to ¥165.2 billion.The company is slugging it out with Canon, its main rival in the digital single-lens camera market, which is expanding on sales to newly retired, deep-pocketed hobbyists and people who switch over from traditional film models. Each sale -- with price tags stretching into thousands of dollars -- also locks in future profits, as many customers also buy expensive interchangeable lenses.But Nikon's drive to sell move cameras came at a price. Despite the revenue boost, Nikon's operating profit slipped 21% to ¥28.7 billion as selling, general and administrative costs grew 15% to ¥70 billion.The growth in costs was due partly to initial expenses involved in the launch of a new product, such as the D700 single-lens reflex digital camera, and advertising costs in the U.S., where the company aggressively aired TV commercials.Although Nikon expects solid sales and profits in the second half of the fiscal year will help it meet its earnings forecasts, some analysts are not as optimistic."Whether Nikon can achieve its fiscal-year operating-profit target may depend on how well it does during the Christmas shopping season," said Mizuho Investors Securities analyst Yuichi Ishida, adding that sales of compact digital cameras will be key."Canon's stronger international brand equity puts it in a better position than Nikon in overseas markets, especially for compact cameras," said Jefferies & Co. analyst David Rubenstein, who assigns a "bottom underperform" rating for Nikon's stock on a three-rank scale.Nikon also said Wednesday it will invest ¥35 billion over the next three years to upgrade capacity to make steppers, a key component in ultra-high specification scanners used in the production of memory chips.Nikon bases its earnings results on Japanese accounting standards.
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