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Sony Shows First Annual Net Profit in Five Years

May 9, 2013
However, profits were due to currency fluctuations and asset sales.

TOKYO -- Struggling electronics giant Sony (IW 1000/39) on Thursday said it 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 gains from a string of asset sales -- including unloading its Manhattan office building for more than $1.0 billion -- while its television and electronics business continues to struggle.

After Sony published it latest earnings Thursday, the firm's chief financial officer Masaru Kato said that years of losses had left management with one mission: "We were determined to report a profit no 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 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.

But 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 more competitive overseas and boosting the value of repatriated foreign income, inflating their bottom line.

Sony said the weaker yen boosted results 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 Sharp and Panasonic which report their full-year results over the next week -- have struggled in the low-margin TV business where foreign rivals have proved tough competition.

On Thursday, Sony said it earned 43.03 billion yen (US$436.08 million) for the fiscal year to March, reversing a 456.66 billion yen loss a year earlier.

Sales in the period were 6.8 trillion yen, up 4.7% on-year, Sony said, adding that it expected to post a net profit of 50 billion yen in the current fiscal year to March 2014 on sales of 7.5 trillion 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.

The corporate makeover, which Hirai has described as "urgent", also includes the sale of its chemical division and investing 50 billion 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% of the global market for medical endoscopes.

Sony has also announced the launch of its PlayStation 4 system as it faces increasing competition from cheap -- or sometimes free -- downloadable video games for smartphones and tablets.

Hirai replaced Howard Stringer, the first foreigner to lead the firm and whose tumultuous tenure included an embarrassing data breach at Sony's online gaming service.

-Shingo Ito, AFP

Copyright Agence France-Presse, 2013

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