Sony on Thursday booked a $1.1 billion annual loss, but the struggling electronics giant said it expects to swing back to profitability in the current fiscal year as it emerges from a painful corporate makeover. The latest loss for Sony comes as the once world-leading firm presses on with a sweeping restructuring that has included layoffs and selling off assets, including its Manhattan headquarters, aimed at rescuing a battered balance sheet.
Boss Kazuo Hirai, a company veteran tapped to turn the firm around, has said he would keep splitting the business into self-operating units as part of the bid to stay in the black. Sony said its net loss for the year to March was 126 billion yen ($1.1 billion), a slight improvement on the 128.4 billion yen loss a year ago, as it absorbs big restructuring costs.
It was also much lower than a 170 billion yen previous forecast by the company, which was itself a reduction from an earlier 230 billion yen estimated shortfall. For the current fiscal year to March 2016, Sony expects a net profit of 140 billion yen and an operating profit of 320 billion yen, although it said sales would be down 3.8 percent.
"The major parts of the restructuring have ended," chief financial officer Kenichiro Yoshida told reporters. "Now is the time that we must regain market confidence after revising down our earnings several times in the past." On Thursday, the electronics-entertainment conglomerate posted an operating profit of 68.5 billion yen, more than double the previous year, on sales of 8.21 trillion yen, a 5.8 percent increase.
Strong demand for the PlayStation 4 games console and electronic devices, including image sensors used in cameras, helped drive revenue, while a weaker yen, which lifts the value of repatriated overseas income, also boosted results, it said. Sony said a long-suffering television unit was recovering, and that executives were not fixated on chasing sales volume.
"This improvement (in televisions) was primarily due to cost reductions and an improvement in product mix reflecting a shift to high value-added models," it said in a statement. Critics have called on Sony to dump televisions altogether but Hirai flatly refused, saying they were an integral part of the company. Sony has struggled in the consumer electronics business that built its global brand, including losing billions of dollars in televisions over the past decade as it faced fierce competition from lower-cost rivals in South Korea and Taiwan.
Hirai did move the firm out of the laptop sector and cut down a smartphone division, turning the focus to its games and entertainment business - which included its Hollywood movie studio and music label. The movie unit, Sony Pictures Entertainment, shelled out about $41 million in costs following a massive cyberattack. Amy Pascal, the unit's head, quit in the wake of the publication of embarrassing emails that were leaked in the hack attack on the Hollywood studio blamed on North Korea.
"Sony is shoring up its TV production business, which has contributed to its overall recovery," said SMBC Nikko Securities analyst Koji Kamichika. "Its strong sectors - imaging sensors and the videogames business - have turned out to be profit drivers. Going forward, we think Sony is now on a recovery path and the downside risks are shrinking."
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