Sony swings to profit in January-March quarter on way to record year, expects drop this year
Sony punctuated its recovery by swinging to a profit for the January-March quarter from a loss a year ago on its way to a record performance for the fiscal year as it reduced losses from its PlayStation 3 video game business.
Strong sales of flat panel TVs and digital cameras also helped nearly triple annual profit compared with the previous financial year, the electronics and entertainment company said Wednesday.
But Sony joined Japanese automakers Toyota Motor Corp. and Honda Motor Co. in forecasting lower profit for the fiscal year through March 2009, citing the strong yen’s erosion on overseas earnings.
Sony Corp. had been battered by a recent fall in gadget prices and the bumpy start of its PlayStation 3 game home console, which required enormous startup costs and struggled against the Wii from rival Nintendo Co.
The last time Sony had a record annual profit was a decade ago, said Chief Financial Officer Nobuyuki Oneda.
For the fiscal fourth quarter, Sony posted a profit of 29 billion yen ($277 million), a reversal from a loss of 67.6 billion yen in the same period last year.
For the financial year through March, Sony earned a better-than-expected profit of 369.4 billion yen ($3.5 billion), a record for the company known for its Walkman portable players and “Spider-Man” movies. That’s nearly triple the 126 billion yen earned in the previous fiscal year.
Quarterly sales dropped 6.5 percent to 1.95 trillion yen ($18.6 billion). Sales were solid in liquid-crystal display TVs, digital cameras and Vaio computers, the Tokyo-based manufacturer said. But sales of mobile phones, old-style picture tube TVs and PlayStation 2 machines declined.
For its quarterly operating performance, which measures how a company did in its core operations, Sony lost 4.7 billion yen ($44.9 million) although that was still an improvement from a much larger operating loss of 113 billion yen in the year ago period.
For the fiscal year through March 2009, though, Sony expects profit to slide 21.5 percent to 290 billion yen ($2.8 billion as sales edge up just 1 percent to 9 trillion yen ($86 billion).
The biggest obstacle is the unfavorable currency swings that are expected in months ahead, the company said.
Sony is expecting the dollar to trade at about 100 yen for the current fiscal year. The dollar, which traded at an average of about 114 yen last year, fell below 100 yen earlier this year and is now trading around 105 yen.
Sony still expects the PS3 business to become profitable sometime in the fiscal year ending March 2009, it said.
Sales in its movies unit declined 11 percent in the fiscal year ended March 31, because fewer films were released compared with the previous year.
Releases for the fiscal year just ended that contributed to theater and home entertainment revenue included “Spider-Man 3” and “Superbad,” according to Sony.
Sony’s music business in Japan fared better compared with the previous year, boosted by best-selling albums. Sony’s results reflect its equity holdings in major joint ventures, such as Sony BMG Music Entertainment, which saw success with Avril Lavigne’s “The Best Damn Thing” and Alicia Keys’ “As I Am” hit albums.
But equity-related income declined on year from Sony Ericsson Mobile Communications AB because of greater research and development costs, it said.
Sony’s latest results were improved by the sale of assets, including its former headquarters in Tokyo, and the absence of expenses for a massive battery recall that hit the previous year.
In the previous year, Sony recalled millions of lithium-ion laptop batteries suspected of defects that caused them to burst into flames in some cases.
Sony shares rose 1.3 percent to close at 4,850 yen ($46) on Wednesday. The earnings were announced shortly after the stock exchanged closed.