‘Urgent’ corporate makeover
Struggling Japanese electronics giant Sony on Thursday booked its first annual net profit in five years, offering a glimmer of hope for the former market leader.
But Sony's jump back into the black was largely due to fluctuations in the
value of the yen and a string of asset sales -- including unloading its Manhattan office building for more than $1.0bn -- while its television and electronics business continues to struggle.
The firm's chief financial officer Masaru Kato said years of losses at Sony had left management with one mission: "We were determined to report a profit not matter what."
Earlier this month, the firm said dozens of senior executives including chief executive Kazuo Hirai, who was appointed last year, would forego their annual bonuses to atone for a slump in Sony's electronics unit.
The decision came after the maker of PlayStation game consoles and Bravia televisions launched a massive corporate overhaul to stem losses, including thousands of job cuts and the asset sales.
"Sony has taken some drastic streamlining measures under new management," said Nomura Securities analyst Shiro Mikoshiba.
"Now the focus is on whether it can generate more profits."
Japan's electronics sector, including Sony rivals Panasonic and Sharp, has suffered myriad problems including slowing demand in key export markets, fierce competition from lower-cost overseas rivals, a strong yen, and strategic mistakes that left its finances in ruins.
A tumble in the yen in recent months -- losing about a fifth of its value against the dollar since November -- has helped Japan's exporters, making their products move competitive overseas and boosting the value of repatriated foreign income, inflating their bottom line.
Sony said the weaker yen boosted its results particularly in its film division, as demand for its digital cameras, video cameras and televisions remained weak, although Sony's CFO said Thursday he expected the TV business to turn a profit in the current fiscal year.
Japanese firms, including Sony rivals Panasonic and Sharp, have struggled in the low-margin TV business where foreign rivals have proved tough competition.
On Thursday, Sony said it earned 43.03bn yen ($436.08m) for the fiscal year to March, reversing a 456.66bn yen loss a year earlier.
Sales in the period were 6.8tn yen, up 4.7 percent on-year, Sony said, adding that it expected to post a net profit of 50bn yen in the current fiscal year to March 2014 on sales of 7.5tn yen.
Sony's expected revenue in the current fiscal year was "primarily due to the depreciation of the yen and an increase in sales in the electronics businesses," it said.
Sony's corporate makeover, which Hirai has described as "urgent," also includes the sale of its chemical division and investing 50bn yen in camera and medical equipment maker Olympus as part of a drive to tap the lucrative medical equipment market.
Although it is better known for its cameras, Olympus controls about 70 percent of the global market for medical endoscopes.
Sony has also announced the launch its PlayStation 4 system as it faces increasing competition from cheap -- or sometimes free -- downloadable video games for smartphones and tablets.
Sony's Tokyo-listed shares, which last year fell below 1,000 yen for the first time since the era of the Walkman, closed 1.35 percent lower at 1,744 yen on Thursday. It results were published after markets closed.