Olympus has announced plans to slash 2,700 jobs over the next two years in order to claw back a deficit that arose from an accounting scandal that hid losses of $1.5 billion.
Currently the company employs 40,000 people worldwide. The camera and medical imaging manufacturer will close 31 of its plants and rationalise its global manufacturing operation by 40 per cent and raise its capital adequacy ratio to 30 per cent or more over the next five years.
The company's chaotic finances came to light after the Olympus board admitted that it had been hiding investment losses for more than a decade. The company has been exploring ways to rebuild its balance sheet after shareholder worth was cut by 75 per cent following the scandal.
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Review of product line-up
In a 'medium-term vision' statement, released today, Olympus says: 'In the imaging business we will review our product line-up by allocating management resources with a focus on mirrorless interchangeable-lens cameras and high-end compact cameras, while improving profitability."
It seems that the management at Olympus believes it can't compete at the cheaper end of the compact camera market because the potential for profit is so low.
Likewise, in the SLR market, where Nikon and Canon have a stranglehold, it is unlikely to be able to compete effectively there either. That leaves the camera division to concentrate on its Pen series of system cameras and some higher end compacts and bridge models.
2012 profit expected
However, all is not gloom. This tax year Olympus expects to be out of the red with a profit of ¥7 billion (around £57 million or $88 million), which compares rather better than the previous year's loss of ¥48.99 billion (around £401 million/$619 million).
Olympus expects its profits to continue rising as a result of its restructuring.
Earlier this week, there were rumours Olympus could be facing a takeover by Panasonic. According to Japanese news agency Kyodo, the TV maker was said to be on the verge of making a ¥50 billion investment (around £410 million/$631 million) in the troubled maker of the PEN compact system camera series, which would make it Olympus' largest shareholder. Today's statement seems to discredit that report.
These announcements should go some way to setting Olympus back on track and, to underscore this, the company has released a 'Back to Basics', five-year, business strategy. It claims this will return the company to the basic values it had at its founding and enable it to make a fresh start in order to regain credibility of its stakeholders, build itself anew and create new corporate value.