Sony buffeted by ¥18 billion loss

Grim reversal from previous year's 3Q profit

by Hiroko Nakata

Sony Corp. said Thursday that it posted an ¥18 billion group operating loss for the third quarter that ended in December as its mainline electronics business was battered by the higher yen, the global recession and stiff competition.

The result — a dramatic turnaround from a ¥236.2 billion profit posted in the same period the year before — is its first operating loss for the October-December quarter.

“The yen’s appreciation is responsible for the operating profit’s year-on-year deterioration,” Nobuyuki Oneda, Sony’s chief financial officer, told a news conference in Tokyo.

Sony also said its group sales for the October-December quarter were down 24.6 percent to ¥2.15 trillion, and net profit fell 94.8 percent to ¥10.4 billion.

The yen’s surge, which erodes Japanese exporters’ profits earned overseas, hit Sony’s earnings hard. About 77 percent of Sony’s sales come from overseas markets.

A ¥1 rise against the dollar slices ¥4 billion from the firm’s annual operating profits. Against the euro, the figure is ¥7.5 billion.

For its full-year results ending March 31, Sony said last week it expects to report a record ¥260 billion group operating loss.

It would be the first full-year operating loss in 14 years and the largest ever. Sony also said it will post a ¥150 billion net loss for the full year, against a ¥369.4 billion net profit in the previous year.

Oneda on Thursday did not rule out the possibility that the figures for the full year could get worse.

“The stock market is a risk,” he said. If Tokyo stock prices decline, assets held by its group firm, Sony Life Insurance Co., will suffer, he added.

To accelerate restructuring, Sony also said last week it will slash production and other costs by ¥250 billion from the previous year throughout the business year ending in March 2010. The company will shut a television plant in Aichi Prefecture, lay off more workers and cut executives’ bonuses.

The closure of the plant will entail the loss of 1,000 jobs, mostly nonregular positions.