Sony records second loss, sees profits ahead

The consumer electronics giant expects to return to profitability this year

Sony recorded its second straight year of losses last year as sales fell 6.7 percent, but the company expects to return to profitability this year, it said Thursday.

The company reported a net loss for the financial year from April 2009 to March 2010 was ¥40.8 billion (US$438.9 million), which is an improvement on the ¥98.9 billion net loss recorded the year earlier. Net sales were ¥7.2 trillion.

At the operating level, which measures profitability in Sony's core business areas and excludes taxes and exceptional and one-off items, the company managed to achieve a profit of ¥31.8 billion. This came on the back of strong performance in its music, movies and financial services businesses. Results at Sony's main electronics business units were mixed.

Sales of consumer products and devices, including its flagship Bravia LCD TVs, Handycam video cameras and Cybershot digital cameras, dropped 19.9 percent on a monetary base. Fierce competition pushed down prices so less money was made -- something that's good for consumers but made for manufacturers like Sony.

While unit shipments of cameras dropped Sony sold 15.6 million Bravia TVs, beating its target of 15 million units.

Sony's networked products and services unit registered a 10.2 percent drop in sales, primarily due to lower revenues from PlayStation Portable (PSP) handhelds and Vaio PCs.

The PSP has been struggling and unit sales last year were 9.9 million, slightly below the company's target and well below the 14.1 million units sold in the prior year. Unit sales of PlayStation 3 consoles increased to 13 million, up from 10.1 million in the year earlier.

Both the consumer products and networked products businesses recorded operating losses for the year but each was not as bad as the prior year.

Sony's non-electronics divisions reported better results.

Revenue at Sony's Pictures unit was helped by "2012," "Angels and Demons," and "Michael Jackson's This Is It," while sales of Michael Jackson CDs and music helped Sony's music arm. Sony Life, the company's insurance subsidiary, recorded a 72 percent jump in revenue thanks to gains from investments and the rising Japanese stock market.

For the current year, Sony expects to achieve a net profit of ¥50 billion and see net sales rise 5 percent to ¥7.6 trillion.

The figures and forecast double as a report card for a company-wide reorganization that took place a year ago. It saw Howard Stringer take the title of president in addition to his role as chairman and assume direct control of the company's key electronics business. Stringer also installed a new executive team consisting of executives with whom he already had strong links.

The reorganization saw Sony's product-based business units rationalized and streamlined. Common areas, such as advertising, were brought together into units that worked company-wide and Stringer also embarked on a restructuring plan that would see unprofitable businesses closed and factories shut-down.

At the end of the year Sony had managed to achieve cost reductions beyond the targeted ¥330 billion, and was ahead of target on factory closures. It had been aiming to trim its factory count from 57 in Dec. 2008 to about 51 by the end of March but was well ahead at 46. In the next six months it plans to shutter a further three factories, it said.

Martyn Williams is in Tokyo and can be reached by e-mail at martyn_williams@idg.com and on Twitter @martyn_williams

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Martyn Williams

IDG News Service
Topics: financial results, sony
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