Sony Posts Widened Quarterly Loss, Cuts Full-Year Outlook
UPDATED: For its fiscal first quarter, the entertainment and consumer electronics giant reported mixed film unit results and lower music financials.
Sony Corp. on Thursday reported a widened loss for its fiscal first quarter despite a revenue gain as the strong yen, particularly against the euro, continued to hurt earnings.
The entertainment and consumer electronics giant posted a loss of $312 million. In yen, its loss widened from 15.5 billionto 24.6 billion. Operating profit fell 70 percent, and adjusted operating profit dropped 40 percent to $258 million.
Revenue increased 1.4 percent to $19.18 billion though, or 5 percent on constant currency terms.
Sony cut its full-year profit forecast amid weaker demand and a continued strong yen, which reduces its overseas earnings.
The conglomerate said its full-year profit will probably reach around 20 billion yen ($255 million). That is down from a May forecast of 30 billion yen. The company also revised downward its full-year operating income estimate from 180 billion yen to 130 billion ($1.66 billion).
Sony's film unit recorded mixed results for the latest quarter. Revenue rose 6.2 percent, or 7 percent on a constant currency basis, to $1.94 billion. But the movie division swung to an operating loss of $62 million after posting a slight profit in the year-ago period. One key factor was higher marketing spending for its latest films, which include The Amazing Spider-Man, which hit theaters at the end of June. The year-ago period had also seen a one-time benefit in the film unit from the sale of a stake in a U.K. TV production firm.
Film revenue benefited from a couple of factors. "The current quarter benefited from higher theatrical revenues from the current fiscal year’s film slate, including the worldwide theatrical performance of Men in Black 3 and higher U.S. made-for-cable and network programming revenues," the company said. "Partially offsetting these increases were lower advertising revenues from Sony’s television networks in India."
Meanwhile, Sony reported a 9.8 percent declined in revenue and a 39.8 percent drop in operating profit for its music operations.
"The decrease in sales was primarily due to the continued worldwide contraction of the physical music market and a larger number of key releases in Japan during the same quarter of the previous fiscal year," the company said. "Best-selling titles during the quarter included One Direction’s "Up All Night and Up All Night - The Live Tour DVD," Carrie Underwood’s "Blown Away" and Usher’s "Looking 4 Myself."
“The weakness of foreign currencies had a 50 billion yen ($639 million) negative impact on profitability in the quarter. Every one yen rise against the euro has 6 billion yen ($76.7 million) effect,” said Yoshinori Hashitani, vp for investor relations
Sales at the once high-flying game division fell by 14.5 percent (10 percent in local currency terms) to $1.49 billion, due to weaker sales of the PlayStation Portable (PSP) and PlayStation 3, somewhat compensated for by the launch of the new PS Vita portable at the end of 2011. All game console makers are facing the challenge of stiff competition for casual gamers from smartphones and tablet computers.
Results at financial services, the banking and insurance division based in Japan, saw sales down 3.5 percent, but still contributed $349 million to Sony's bottom line.
“The Olympics have had little effect on sales of consumer electronics, but demand for professional broadcast media equipment has been boosted,” said Shiro Kambe, svp of corporate communications, in response to a question about the effect of London 2012 on sales.
“75 billion yen has been set aside for restructuring this year, with most of that scheduled to be used in the second half of this fiscal year,” said Hashitani.
However, Kanbei denied there were any plans for further job cuts, despite the lowered forecasts for the current year.
Georg Szalai in London contributed to this report.
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