Sony forecasts return to modest profit

Sony forecast that it would return to a modest net profit this year after suffering its worst loss in 16 years in the wake of Japan’s devastating earthquake and tsunami.

The forecast profit of Y80bn ($983m), issued by the technology group on Thursday, was more cautious than analysts had expected even after the disaster, which disrupted supply networks across many industries.

Many of Sony’s rivals have put off issuing forecasts, citing uncertainties over when they might be able to return to normal production.

On Monday, Sony disclosed a Y260bn net loss for the accounting year that ended on March 31 – its third net loss in as many years and the biggest under Sir Howard Stringer, chief executive since 2005.

The immediate cause was a Y360bn write-off of deferred tax credits – a technical accounting issue, but one that showed shrinking confidence in the outlook for Sony’s profitability. The credits have value only if Sony can be sure that it will swiftly recover from its recent losses and earn taxable income in Japan.

The company suffered the additional blow of an attack by computer hackers last month on its PlayStation Network video game platform and other internet-based services, in which personal information belonging to users was exposed to theft. Sony on Wednesday admitted the battle with hackers is spreading, acknowledging three new attacks in which customers in Canada, Thailand and Indonesia had their personal information targeted. The Japanese group reiterated that it expected the security breach would cost it Y14bn this year. In spite of problems with the gaming network, Sony said it expected to sell 15m PlayStation3 video game consoles in the current fiscal year, up from 14.3m last year.

Sales of handheld PlayStation Portable machines are likely to drop from 8m to 6m as customers await a new version of the device that Sony hopes to launch at the end of the year.

Masaru Kato, Sony’s chief financial officer, said it was likely the company would lose money producing and selling TVs for the eighth consecutive year. Stopping losses at the division has been a key goal of a restructuring led by Sir Howard, in which he has sold or closed some TV plants and outsourced more production to places such as Taiwan.

Sony had previously said it expected profits at the operating level to be flat compared with last year at Y200bn. It said the figure was likely to have been Y150bn higher, had it not been for the quake and tsunami.

Electronics industry analysts had expected Sony to earn a net profit of Y110bn-Y115bn.

Sony expects group-wide sales revenue to increase 4.4 per cent this year.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.