Fiscal Reports: Leica Going Uphill, Olympus Going Downhill

The planned new Leica production facility in Wetzlar, Germany

While Leica Camera AG reports a sales high of € 81.9 million (US-$ 108m) for the third quarter of the ongoing fiscal year, Olympus reports a loss of an estimated ¥ 32 bn. (US-$ 412m) until the end of the fiscal year in March. Where Leica experiences an ongoing streak of success, Olympus suffers a continuing streak of bad luck that shows no sign of breaking off. And while the past fiscal year has been extremely fortunate for Leica, it was extremely unfortunate for Olympus. Read more after the jump.

Leica sales continue to rise

Leica Camera AG, based in the picturesque little town of Solms in rural mid-western Germany, has been doing extremely well recently. And not only recently — since the introduction of the M9 digital rangefinder two and a half years ago, Leica’s sales have been ever-growing, their stock market value has been ever-rising, and their order books have been ever-filling. In the past fiscal year, Leica’s overall sales have risen by almost 20 % in comparison with the previous fiscal year, while digital camera sales alone rose by 23.6 %.

Adding to the overall increase in sales and profit, Leica just recently announced that U.S.-based strategic investor Blackstone had bought up a considerable amount of Leica shares. The declared goal of the cooperation between Leica and Blackstone is to support the growth of the company and to help it access new markets. Meanwhile, not far from Solms, in the slightly bigger but no less picturesque town of Wetzlar, the place where the company was first founded, preparations are on their way to build a new production facility that will help meet the ever growing demand for Leica products.

Olympus still shaken by financial scandal

Meanwhile, on the other side of the world, a camera maker with an equally long history in creating quality optical products, is in deep trouble. After a major financial scandal, Olympus Corporation only just slid past the edge of disaster. For years, the company’s leaders had intentionally been hiding losses from the public, declaring them as fees for financial advisors. This plot was only revealed with the advent of Michael Woodford as the company’s new CEO, who was fired again shortly thereafter. What followed was a series of investigations, in the process of which those responsible for the scandal mostly resigned from their positions. Because of the financial scandal, the Tokyo stock exchange was about to expell Olympus, who luckily got away with paying a penalty fee. Yet the trouble does not end here: last week, Olympus’ ex-CEO Woodford announced that he had filed a lawsuit against the company.

Despite all the trouble Olympus is currently in, and despite the heavy losses the company has recently made, the camera business is going strong. Digital camera sales have risen by 14.7 % over the course of nine months until December 31st, 2011, and the operating losses fell from ¥ 7.7 bn. (US-$ 99 m) to ¥ 3.8 bn. (US-$ 49 m) — thanks to a strong demand for Olympus’ latest camera and lens products. And with the recent announcement of the new OM-D E-M5 Micro Four Thirds camera and two new lenses for the system, demand will probably not cease any time soon.

Olympus shares gaining on stock markets

From a strategic point of view, this could be a good time to buy Olympus shares. The company has dealt rather well with the scandal, and if the camera business continues to go this strong, the stock value could be rising again in the long term. Olympus shares are currently at a high of ¥ 1,280 (US-$ 16.40), after initially having dropped to a low of ¥ 424 (US-$ 5.44). The previous high was ¥ 2,835 (US-$ 36.36) before the financial scandal became public. It might be wise though to wait for the result of the Woodford lawsuit before investing in Olympus shares.

On the other hand, despite the company’s success, this is no time to buy Leica shares. The reason for this is simple: Leica’s majority shareholder, the German Lisa Holding GmbH, has recently announced that they intend to get a hold of all remaining stocks by means of a squeeze-out of the remaining minority shareholders. While shareholders will receive a significant compensation, this ultimately means that no more money can be made by investing in Leica shares. Those who bought shares when Leica was on the ground will of course have made a considerable profit once they sell off their stocks to Lisa.

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