Sony sees return to profit as restructuring pays off
Japanese electronics giant Sony on Thursday said it expects to return to profit in the current financial year on the back of tough restructuring measures and a pick-up in demand.india Updated: May 13, 2010 15:12 IST
Japanese electronics giant Sony on Thursday said it expects to return to profit in the current financial year on the back of tough restructuring measures and a pick-up in demand.
The maker of Bravia televisions, PlayStation game consoles and Cyber-shot cameras forecast a profit of 50 billion yen in the year ending March 2011 as it looks to aggressively launch 3D televisions and related products.
For the financial year just ended, the company reported an operating profit of 31.8 billion yen compared to a loss of 227.8 billion yen the previous year, which was its biggest ever.
Sony announced its second consecutive annual loss of 40.8 billion yen (440 million dollars) for the past year, narrowing from a loss of 98.9 billion yen previously.
Chief executive Howard Stringer, who became Sony's first foreign chief in 2005, is under pressure to turn around the company as it sees its first back-to-back annual losses since it was listed on the stock market in 1958.
The electronics giant has been forced to undergo major restructuring -- slashing 20,000 jobs, selling facilities and turning to suppliers for parts -- after seeing losses pile up as the financial crisis hit demand.
However, the three months to March saw losses narrow to 56.6 billion yen from 165.1 billion a year earlier, indicating that major restructuring combined with a reviving market are steering Sony back towards health.
Nobuyuki Oneda, Sony's chief financial officer, told reporters that restructuring would continue this year, while the electronics giant forecast its TV, games and cell phone joint venture Sony Ericsson to return to profit.
Oneda said Sony hoped to sell around 25 million television sets in the current year, an increase of around 10 million units from the previous year.
He added, however, that Sony was wary of the eurozone debt crisis, as Europe accounts for 25 percent of global sales.
The company has had a difficult few years in the face of tough competition from rival products such as Apple's iPod and Nintendo's Wii.
However, sales of its Playstation 3 console rose on-year and are expected to climb in the current financial year.
Osamu Hirose, an analyst at Tokai Tokyo Research Centre, said Sony was on its way to a V-shaped recovery from its earlier slump.
"Sony is planning to start selling 3D televisions in June, which will be one of the factors helping the company regain its footing," Hirose said.
In doing so the company will join rivals such as Sharp and Samsung Electronics in a sector the industry hopes will help revive profits, as strong competition and falling prices force a reevaluation of the liquid crystal display (LCD) business.
Sony forecast an operating profit of 160 billion yen for the year ending March 2011, slightly below analysts' expectations of around 200 billion yen.
It reported its first annual loss in 14 years in fiscal 2008, as the global economic downturn inflicted heavy damage on Japan's high-tech companies.