Nikon profit up, strong yen hits outlook

By Mayumi Negishi

TOKYO (Reuters) - Japan's Nikon Corp (7731.T: Quote, Profile, Research, Stock Buzz) said its quarterly operating profit rose 48 percent thanks to sales of advanced cameras and chip-making equipment, but it predicted a fall in operating profit this year.

A strong yen is taking a toll on Nikon's camera business, even as the company faces increasing competition on its home turf from Netherlands-based rival ASML (ASML.AS: Quote, Profile, Research, Stock Buzz) in chip steppers, machines that print circuitry on silicon wafers.

For the year that began in April, Nikon forecast that operating profit would fall 3.8 percent to 130 billion yen ($1.3 billion), while analysts predict an average 143.9 billion yen.

A strong yen will cut profit by 20 billion yen, Chief Financial Officer Ichiro Terato told reporters.

Nikon, the world's No.2 maker of steppers, expects new chip stepper shipments to drop to 112 units this year from 146 units in 2007/8, while shipments of LCD steppers are forecast to rise to 68 units this year from 45.

"Competition is extremely stiff, while the business climate for chip makers remains severe," Terato said. "We expect a recovery in the chip market in the second half of this business year."

Nikon and ASML are fighting for market share with their newest products called immersion steppers, which are multi-million dollar machines that use purified water between the lens and the silicon wafer to project finer details on a chip.

Nikon expects to ship 25 immersion steppers this year, accounting for 22 percent of its total chip stepper shipments this business year, up from about 10 percent last year.