Olympus, the Japanese camera and medical equipment manufacturer, has announced a new five year plan that focuses on going “back to basics”. Unfortunately, for the company’s employees, the plan also includes cutting 2,700 jobs or 7% of its 40,000 global workforce by 2014. The company will also consolidate its manufacturing units by 40%, which includes disposing of unused properties and closing its Philippines plant.
In a statement released on Friday, the company said, “We will withdraw from businesses which we judge to offer insufficient profitability and potential,” The Company plans to improve its capital ratio by 30% while concentrating on its core business areas of imaging, medical and life sciences. “We will not make new investment in areas other than the core business domains.” the statement said.
Although Olympus is more popularly associated with cameras but it is the global leader for endoscopes, used my medical professionals to look inside the body cavities. As of last year, Olympus had about 75% of the global endoscope market share.
The company has reported a net loss of $618mn for the year ending March, 2012 because of tax costs and foreign currency fluctuations. The company was performing well, even during the global financial crisis, as this is only the first time in three years that it has reported a loss. On the other hand, we now know from the accounting scandal, that it has been hiding its losses for 13 years.
- For the current year ending March 2013, the company is expected to make a profit of $90mn.
- It plans to post $500mn in net profits for the year ending from March, 2014 and
- $1.07bn for the fiscal year from March, 2016.
The focus of the company in the future will be on emerging markets of China and India
The Accounting Scandal
It is already recovering from a massive accounting scandal, when its former chief executive Michael Woodford blew the whistle that the company concealed losses of $1.7bn. Mr Woodford claimed that Olympus had used acquisitions and consultant fees to hide its enormous losses. Initially the company denied all the charges and claimed that it was not involved in any illegal practice but later it admitted to the wrongdoing.
The charges resulted in criminal investigations while investors filed separate lawsuits. Earlier this year, the company’s three top executive were arrested for falsifying securities reports