Japan's Nikon Corp is likely to beat its digital camera sales forecast for the financial year to March on strong demand in China and other parts of Asia, the head of its camera division said on Friday.

Digital cameras are now the chief profit driver for Nikon as demand for steppers, its other main product, which produce semiconductors, has yet to fully recover from the global economic slowdown. Nikon, which competes with Canon Inc in high-end cameras, said earlier this month it aimed to sell 3.55 million digital single-lens reflex (SLR) cameras in the year to March and 11.5 million point-and-shoot compact cameras. SLR cameras, a high-end type that use interchangeable lenses, are the most lucrative and fastest-growing segment of the digital camera market. “Our SLRs and interchangeable lenses will probably be beating our own targets,” Nikon Executive Vice President Makoto Kimura told Reuters in an interview on Friday. “Demand in Asia – especially in China – has been growing strongly.” Besides camera bodies, camera lenses are another product that generate fat profit margins for Nikon and Canon. Nikon aims to sell 5.15 million interchangeable lenses in the current business year, according to its official forecast. That would be up from 4.87 million units last year. For the year starting in April, Nikon aims for 10 percent growth in digital SLR camera sales, keeping pace with estimated growth in the global market for the product, Kimura said. He said it is possible to raise revenues in the camera division to 700 billion yen to 800 billion yen ($7.6 billion to $8.7 billion) in three to five years by further boosting sales of its digital cameras and expanding camera-related services, but did not elaborate.

Nikon expects sales at its camera unit to reach 560 billion yen in the current year to March. Daiwa Securities Capital Markets analyst Hiroyasu Sato said digital cameras have bigger growth potential in emerging markets than other consumer products such as PCs and cellphones, making strong top-line growth at Nikon's camera business possible. “Emerging markets already account for 70 percent of mobile phone demand, and 60 percent of PC demand. The figure is only 30 percent for digital cameras, but it should grow steadily to overtake demand in developed economies,” he said. Nikon's Kimura said, however, the company has no intention of launching lower-priced models just to expand sales in emerging markets. “What we have to do in emerging markets is to build up our brand carefully,” he said. “Offering low-priced products could give you bigger market share temporarily but it could also cheapen your brand, and it would be extremely difficult to clean up your brand image once it is smeared.” Shares in Nikon closed down 3 percent at 1,967 yen, underperforming the Nikkei average, which fell 2.1 percent. The interview was published a few minutes before the market closed.

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