Japanese camera firms to merge

A merger will help both firms survive tough markets

Japanese camera manufacturers Konica and Minolta have agreed to merge to create a company with annual sales topping $8bn (£5bn).

The merger is intended to help them face down tough competition from other Japanese firms in the photography and office-equipment market.

In a joint statement, they said they would unify their management structure, but no financial details of the agreement were given.

By combining their operations, Konica and Minolta can expect to vault into the number four slot in the Japanese market for cameras and copiers, according to sector analysts.

Survival plan

But they face stiff competition on all sides, leading analysts to question whether the merger was enough to guarantee their longer term survival.

In recent years, both firms opted to build up their office-equipment businesses after rivals like Sony outpaced them in digital cameras.

But in office equipment they were also competing with bigger rivals, such as Canon and Ricoh.

For the last two years, the two firms have developed and produced office copiers together.

The merger brings the chance of cost savings which "increase the possibility that the two [could become] a survivor group in the highly competitive sector," said Masahiro Nakanomyo, an analyst at Mitsubishi Securities.

Mixed reaction

But some analysts remained sceptical, saying the two would need to focus hard on product development, especially of digital cameras.

Minolta's shares shot up nearly 9% in Tokyo on Tuesday following the news, though they sank back to close 1.5% higher.

Konica investors were less enthusiastic about the prospect of absorbing loss-making Minolta, sending the stock down almost 1%.

Konica was the first firm to develop colour film in Japan in 1940.

Konica's sales were worth 539.6bn yen in the year to March 2002, when it posted net profits of 11.1bn yen.

Minolta notched up a loss of 34.5bn yen on sales of 510.9bn yen.

The merged company is targeting an operating profit of 150bn yen on sales of 1.3 trillion yen in the year to March 2006.