Sony swings to a £216 million loss in Q2

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Sony says it expects full-year loss will be 50 per cent larger than previously predicted due to Thai floods and poor sales forecasts in the US and Europe

Sony Corporation recorded a net loss of £216 million for its second quarter ending September 30, down from a £248m profit in the same quarter of last year.

The reported loss comes just days after the firm announced it was buying out Ericsson’s half of the Sony Ericsson handset-making joint venture for £905 million as part of plans to reinvigorate the whole of the consumer side of its business.

Revenues at Sony during the quarter fell 9.1 per cent to £12.6 billion from £13.8 billion in the same quarter of 2010.

The firm blamed poor sales of LCD TVs and currency fluctuations or the fall in revenues.

Sony said it was now forecasting a 50 per cent higher loss of £720 million for the full year ending March 31 2012. In July the firm predicted losses of £480 million for the year.

The firm’s Sony Pictures film studio provided a bright spot amid the gloomy results, swinging to a profit of £165 million from a loss of £38 million in the same quarter a year ago.

Sony said it had revised down the full-year forecast due to expected currency fluctuations and expected sales falls at its Consumer Products and Services and Professional, Device and Solutions.

The firm also said the ongoing floods in Thailand are expected to cost it £200 million, due to the impact on both Sony’s manufacturing operations and those run by its partners.

The floods are the latest natural disaster to affect Sony’s performance following the Japanese Tsunami at the start of this year.

Referring last month to the Tsunami and other disasters that had impacted on Sony, CEO Sir Howard Stringer (pictured) said that the firm had experienced “everything but toads and pestilence”.

Once the deal to buy the remaining half of Sony Ericsson is completed, the handset maker will become part of the Consumer Products and Services Division.

The president of the Consumer Products and Services Group Kazuo Hirai, who is also Sony’s representative corporate executive officer and executive deputy president, was drafted in to the earnings announcement in Tokyo.

He said that Sony would be scaling down its TV operation, targeting production of 20 million by 2014, rather than the 40 million the firm was previously targeting. He also said that Sony’s smartphone business would be key to the firm’s future.

Hirai said: “We are facing a big loss but I believe it is necessary, so that we can return to profit in the future.”

 

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