Sony issues profit warning after failed attempt to reverse fortunes
Sony president and chief executive officer Kazuo Hirail: Sony’s numbers underline the challenges facing Kazuo Hirai, who took up the helm of Sony in April last year. Photograph: Fabrizio Bensch/Reuters
Japanese consumer giant Sony is poised for another abortive turnaround after slashing its full-year net profit forecast by 40 per cent to ¥30 billion (€224 million), well below the ¥50 billion that it envisaged in August. The group, once a byword for Japan’s industrial and technological prowess, has in recent years been falling below its global rivals – not least Samsung in neighbouring South Korea.
In attempt to reverse its fading fortunes, the company has launched several restructurings since 2005, when Howard Stringer was moved from the US division to head up the company, shedding staff and cutting production.
However, these have had little impact on Sony’s bottom line, as demonstrated by the latest set of quarterly results yesterday that showed a net loss of ¥19.3 billion in the quarter to the end of September, compared with market expectations of a ¥14.8 billion profit.
The quarterly loss is even deeper than the previous quarter’s ¥15.5 billion loss.
The numbers underline the challenges facing Kazuo Hirai (right), who took up the helm of Sony in April last year, and also the limits of Abenomics to regalvinise the country. While the reforms launched by prime minister Shinzo Abe have had some success in banish deflation, in part through a weaker yen, the impact on the corporate sector has been more mixed.
The weaker yen has served as a fillip – indeed, even Sony reported that sales were up 10.6 per cent “primarily due to the favourable impact of foreign exchange rates” – but sometimes largely as a foreign exchange translation gain. Without the currency effect, Sony’s sales fell 9 per cent.
Failure to provide further stimulus makes it difficult for companies to increase wages, in turn subduing the domestic consumption which is supposed – under Abenomics – to drive growth. – Copyright The Financial Times Limited 2013