Sony logs ¥228 billion loss, sees more red ink

by Hiroko Nakata

Sony Corp. suffered a record ¥227.78 billion group operating loss for the business year that ended on March 31, blaming plummeting global demand and the yen’s surge against other currencies.

It was the first full-year operating loss for the electronics and entertainment giant in 14 years. Sony on Thursday also released a dim outlook for the current business year, saying it expects a ¥110 billion operating loss because the worldwide economic downturn will continue to create a harsh business environment.

The loss for business 2008 marked a sharp contrast with the ¥475.30 billion profit Sony posted the year before.

It logged a group net loss of ¥98.94 billion on sales of ¥7.73 trillion, against a ¥369.44 billion net profit on ¥8.87 trillion sales in the 2007 business year.

“The deterioration of the economy, triggered by the Lehman shock, made things extremely serious worldwide,” Nobuyuki Oneda, Sony’s chief financial officer, told reporters in Tokyo. He added that the yen’s surge against major currencies and a tumble in Japanese share prices also hurt earnings.

The higher yen took about ¥968 billion out of Sony’s sales and about ¥279 billion out of its operating profit. The yen’s surge erodes profits earned overseas by Sony and other export-oriented manufacturers.

Oneda said Sony is ahead of schedule on its restructuring plan announced in December and January. The company said it has already slashed more than ¥300 billion in production and other costs from the previous year, against ¥250 billion it announced it would cut throughout the course of this business year.

Sony also said it has decided to close a total of eight plants at home and abroad, against its plan to cut about 10 percent of its 57 plants by next March. It also said it has completed its global 16,000-job restructuring plan announced in December.

Oneda said the firm will continue restructuring for the next few years, including job cuts, even though it has already reached its current goals.

But Sony, which is trailing Apple Inc., has no clear strategy to turn its fortunes around, and it expects its core electronics sector to lose even more money this year due to the higher yen and restructuring costs.

Panasonic loss

OSAKA (Kyodo), BLOOMBERG Panasonic Corp. is expected to log a group net loss of tens of billions of yen in business 2009, falling into the red for the second consecutive year due mainly to costs linked to restructuring its production bases, company sources said Thursday.

The company anticipates a ¥380 billion group net loss for business 2008, which ended in March. This would mark its first red ink in six years and a sharp turnaround from a net profit of ¥281.88 billion logged a year earlier.

Panasonic, formerly Matsushita Electric Industrial Co., joins a growing list of other electronics giants, including Toshiba Corp. and Hitachi Ltd., in projecting two consecutive years of net losses, with their earnings hit by weak sales and a stronger yen.

Panasonic anticipates its operating profit, which better reflects the performance of its core businesses, to be in the black for the current business year through next March, the sources said.

But a solid recovery in sales of its mainstay products, including flat-panel TVs and digital cameras, is expected to take more time amid the ongoing global economic downturn.

Panasonic expects to book heavy restructuring costs as it cuts 15,000 jobs worldwide by the end of next March and shutters 27 of its production facilities in Japan and overseas.

Meanwhile, Sanyo Electric Co., which is being acquired by Panasonic, announced Thursday it expects an increase in annual operating profit, beating analyst estimates.

Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably triple to ¥25 billion in the 12 months to March 31, 2010, from ¥8.28 billion a year earlier, Sanyo said.