Update: Sony returns to profit, cuts full-year loss forecast

Sony returned to the black in the last three months of 2009, achieving its first operating profit in five quarters and cutting its forecast loss for its full fiscal year, which ends March 31.

The company reported an operating profit of ¥146 billion ($1.5 billion) for the quarter, its highest level in two years, on the back of sales of ¥2.2 trillion, up 4% from the same period a year earlier. Net profitability returned after three quarters of losses and was ¥79.2 billion.

The positive results were helped by a doubling of sales at Sony's financial unit and a 16% rise in sales at its movies business over the same period a year earlier.

The company's core electronics business didn't fare as well.

Sales in the consumer products and devices division dropped 11% as a result of price competition in the flat-panel TV, gaming-console chip and optical pick-up sectors but the benefits of restructuring helped the business make an operating profit.

Sales of Bravia LCD TVs and Cybershot digital cameras rose during the quarter but Handycam sales were down. As a result of the higher Cybershot sales, Sony revised upwards its digital camera full-year shipments forecast by 1 million units to 21 million cameras. It kept TV sales targets unchanged at 15 million but said it is hoping to sell around 20 million TVs next fiscal year and return its TV operations to profitability.

In the networks products group Sony saw a modest rise in sales of 2% as Vaio PCs enjoyed higher sales worldwide. A total of 2.3 million Vaio PCs were sold during the quarter, 600,000 more units than it sold in the last three months of 2008. For the full fiscal year Sony raised its sales forecast by a similar amount to 6.8 million PCs.

The group was hit by lackluster results from its gaming unit, which saw sales of the PlayStation 2 and PlayStation Portable fall.

Sales of the PlayStation 2 dropped to 2.1 million units from 2.5 million units a year earlier while the PlayStation Portable saw a drop to 4.2 million from 5.1 million. The launch of a revised PlayStation 3 pushed sales of the console up to 6.5 million units from 4.5 million and cost improvements in manufacturing of the machine helped offset the drop in sales of the PS2 and PSP.

For the full fiscal year Sony cut its PSP sales forecast by a third to 10 million units while raising the PS2 target from 5 million to 7 million consoles on the strength of demand from developing nations. PS3 sales targets were left unchanged at 13 million consoles.

Sony cut further its loss forecasts for the full year to the end of March and now expects to see a net loss of ¥70 billion. Sony had been expecting to lose ¥95 billion, a figure that was revised down in October from ¥120 billion.

The upwards revision comes partly as a result of the improved profitability in the consumer products and financial services divisions and a good start to Sony's fiscal fourth quarter, which began in January.

"In the first month of the fourth quarter the results are about the same as we anticipated or better than we expected," said Nobuyuki Oneda, Sony's CFO, at a Tokyo news conference.

Sony said it remains on track to achieve cost reductions of ¥330 billion this fiscal year. Sony is cutting the number of suppliers it deals with to reduce procurement costs and is ahead of target on realignment of its manufacturing plants. The company had planned to close about six of its 57 factories worldwide but by March 2010 it expects to have just 46 plants in operation with a further plant closure planned.

Copyright © 2010 IDG Communications, Inc.

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