Sony leads Japan’s electronics makers back to black
Japanese electronics giant Sony yesterday said it returned to the black in the fiscal first quarter thanks to strong sales in televisions, its PlayStation 3 console and computers.
The maker of Bravia televisions and Cyber-shot cameras also upwardly revised its annual profit forecast by 20 per cent to 60 billion yen in the year ending March 2011 despite worries over the yen’s strength. In the April-June quarter Sony reported a profit of 25.7 billion yen ($293 million) compared with a 37.1 billion yen loss a year ago.
Under chief executive and president Howard Stringer, the Japanese company has been streamlining operations and cutting costs to trim back the sprawling group, which was battered by the global downturn.
The electronics giant has been forced to undergo major restructuring – slashing thousands of jobs, selling facilities and turning to suppliers for parts – after seeing losses pile up as the financial crisis hit demand.
But it warned that “further appreciation of the yen against the euro is expected for the remainder of the year” and revised its exchange forecast to 110 yen versus the euro, compared with 125 forecast in May.
It maintained its previous forecast of 90 yen to the dollar.
However, the dollar is currently hovering around the 87 yen mark, while the euro is around 113 yen.
Japanese exporters remain anxious about the recent strength of the safe-haven yen amid ongoing uncertainty over the eurozone economy and doubts over the durability of a US recovery.
“Japanese electronics makers are on a recovery track. But there are some uncertain elements, notably the appreciation of the yen,” said Hiroshi Sakai, chief economist at SMBC Friend Research Centre. “The present rate is tough.”
If sustained, a stronger yen could erode repatriated overseas profits and make goods more expensive overseas.
Europe comprises a quarter of Sony’s business, and while it saw no immediate risks, chief financial officer Masaru Kato urged caution.
“We cannot let our guards down regarding our future prospects. Even if the business prospects weaken a little bit we would like to ride them out,” he said.
In the quarter ended June, Sony posted an operating profit of 67 billion yen compared to a loss in the same period a year ago.
The company is also banking on the mounting popularity of products that enable three-dimensional viewing. Televisions showing 3D images went on sale in Japan last month.
Shares in Sony closed 0.03 per cent lower in Tokyo before the earnings announcement.
Separately Toshiba Corp. said it crept into the black for the first quarter on strong demand for flash memory chips used in laptops, smartphones and other gadgets.
The company, whose business spans consumer electronics, industrial components and nuclear power plants, reported a net profit of 466 million yen, reversing a net loss of 57.8 billion yen a year earlier.
Sharp, Japan’s top manufacturer of liquid crystal display (LCD) TVs also said it returned to the black in the period with a net profit of 10.7 billion yen on strong LCD sales and mobile phone handsets.
It had posted a net loss of 25.2 billion yen a year earlier.
Panasonic Corp. was also back in profit as brisk sales and cost-cutting efforts offset the negative impact of a strong yen and a rise in prices of raw materials.
The company posted a net profit of 43.7 billion yen for the three months, reversing a net loss of 53.0 billion yen a year earlier. Sales jumped 35.5 per cent to 2.16 trillion yen and it upgraded its full year forecast.
Fujitsu saw a net profit of 1.64 billion yen and operating profit of 10.0 billion yen in a turnaround from a year-before net loss of 29.20 billion yen and operating loss of 37.16 billion yen.