Sony and Panasonic on Thursday posted quarterly profits as the pair try to put years of losses behind them, but analysts warned that they still have a lot of work to do to overhaul their bloated businesses.
Japan’s electronics sector has been battered by fierce competition from sleeker, lower-cost rivals, a shrinking domestic market and huge losses from the television business.
A sharp drop in the yen’s value since late 2012 provided a lifeline by inflating the value of profits repatriated from overseas, as Sony, Panasonic and smaller rival Sharp engaged in painful restructuring to slim down their vast operations.
But the impact of the weakened yen is fading, and the giants have more work to do in reinventing themselves, analysts said.
“Japanese electronics makers can’t expect much from the impact of a weak yen this fiscal year,” said Yasuo Imanaka, an analyst at Rakuten Securities.
“Sony is now heavily relying on its entertainment, music and insurance businesses.
“They have to speed up the pace of their restructuring, which is crucial for survival. Otherwise, investors are going to lose patience.”
On Thursday, Sony posted a surprise ¥26.8 billion net profit for the quarter through June, reversing a year-earlier loss, with sales up about 6 percent as gamers flocked to the newest version of its PlayStation game console.
The consumer electronics giant also said box-office hits, including “The Amazing Spider-Man 2,” boosted results at its movie unit, which includes a Hollywood studio.
Sony more than doubled operating profit in its TV segment thanks to strong sales of flat-screen televisions in Asia and Europe. Although Sony has been trying to fix the bleeding business for years, it still expects a loss for the full year.
Sony lost $1.2 billion last year, blaming the whopping shortfall on costs tied to its exit from the personal computer business.
“The chances are growing that we’ll return to profitability in the television sector,” Sony Chief Financial Officer Kenichiro Yoshida said Thursday.
“We’ve got to achieve that goal no matter what — we’ve suffered a decade of losses” in that business, he added.
Panasonic, meanwhile, said its net profit for the quarter hit ¥37.9 billion, down from ¥107.8 billion last year when it logged a big one-off gain from a pension scheme change, as sales edged up 1.5 percent.
The firm said it expects to log a net profit of ¥140 billion in the current year.
Compared with its rivals, Panasonic appears to be making more headway in shaking up its business and staying out of the red, said Keita Wakabayashi, analyst with Mito Securities in Tokyo.
“Panasonic is more stable than its competition and it now seems to be on course for a steady recovery,” Wakabayashi added.
Panasonic separately announced Thursday that it signed a deal with upstart U.S. electric car maker Tesla to build a large battery-making plant in the United States.
Panasonic, a major producer of lithium-ion batteries, did not say how much it will invest in the site, known as the Gigafactory, but local media previously reported that it will pump in as much as ¥30 billion.
Also Thursday, Finnish mobile phone giant Nokia said it agreed to buy some of Panasonic’s wireless network business, but did not supply any details about the price.