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Sony posts record full-year loss
Japanese electronics giant posts $5.7bn loss but vows it will return to profit this year after restructuring efforts.
Last Modified: 10 May 2012 11:03
Walkman and PlayStation maker Sony has struggled to compete with electronics rivals Apple and Samsung [Reuters]

Japanese electronics giant Sony posted a record full-year loss of $5.7bn, but vowed it would return to profit this year as it embarks on a huge restructuring plan.

Sony, which is struggling to stem losses at its television division, said on Thursday a strong yen and natural disasters were among the main reasons for its disastrous earnings.

"Sales decreased... primarily due to unfavourable foreign exchange rates, the impact of the Great East Japan Earthquake (in March 2011)... the floods in Thailand, and deterioration in market conditions in developed countries," it said in a statement.

The natural disasters hammered Japanese manufacturers while Sony has also blamed tough competition and falling prices, particularly in the television segment, for its struggles.

Sony's 456.66bn yen ($5.7bn) loss for the year to March, its fourth consecutive year in the red, came after it said last month it would cut about 10,000 jobs and spend nearly $1bn on an overhaul that its new chief executive Kazuo Hirai described as "urgent".

Sales for the year fell 9.6 per cent to 6.49 trillion yen, while the firm booked an operating loss of 67.28 billion yen.

On Thursday, Sony's Chief Financial Officer Masaru Kato said the company was aiming to make its television business profitable next fiscal year, with the firm on course for a net profit of 30bn yen in the current fiscal year on sales of 7.4 trillion yen.

'Horrible year'

However, analysts have criticised the turnaround plan as not enough to win back Sony's reputation as an innovator or vault its foreign rivals.

"The last year was horrible," Hiroshi Sakai, analyst at SMBC Friend Securities in Tokyo, told AFP on Thursday.

"Some complex, bad conditions hit the company, including a soaring yen... But there is a question as to whether Sony should keep the TV division as part of its business."

Sony's reforms, in addition to the jobs cuts, also include expanding its PlayStation and online games business, and pushing further into emerging markets and new sectors, such as medical equipment and life sciences.

"Now is the time for Sony to change," Hirai, who replaced Welsh-born US chief executive Howard Stringer earlier this year, said in April.

"What is urgent is that we strengthen our core businesses while rebuilding our TV business."

Investors, however, have been unimpressed. Sony shares are now worth 1,213 yen, down from 1,528 yen before Hirai unveiled his plan last month.

Sony, along with Japan's other electronics giants including Panasonic and Sharp, has been fighting a losing battle for years against fierce competition offered up by competitors including South Korea's Samsung and US-based Apple.

Falling prices, particularly in the television segment, have eaten away at their bottom line as a strong yen made their products more expensive overseas, while a stuttering global economy has also knocked sales.

Sony still generates profits in some areas, such as electronics parts, but critics have accused the company of various strategic blunders over the years including being late to enter the liquid crystal display panel market.

The firm was forced in December 2008 to slash 16,000 jobs worldwide as it came under pressure amid tumbling demand during the global financial crisis.

Source:
Agencies
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