Sony reports 9 percent drop in profits
TOKYO (AP) – Sony Corp. reported Thursday a nearly 9 percent drop in profits for the past fiscal year, although the Japanese electronics and entertainment giant managed to post stronger earnings in its video-game and film businesses. Sony’s net income totaled 15.3 billion yen ($119 million) for the fiscal year that ended in March, compared with 16.8 billion yen the year before. Still, the results far surpassed Sony’s previous estimates.
The company recorded its largest consolidated sales in its history, totaling 7.6 trillion yen ($59 billion), up from 7.3 trillion yen the previous year. The recent favorable exchange rate helped boost revenue for fiscal 2001, Sony said. A weaker yen helps lift the overseas earnings of exporters like Sony. Sony also said the steps it took to reduce fixed costs, adjust inventory and concentrate on key business sectors also helped the Tokyo company ride out the extremely difficult global electronics slump. Sony revised its forecast downward twice over the last fiscal year. Most recently, it was predicting a net profit of 10 billion yen ($78 million).
“The global economic environment in which Sony operates continued to show weakness during the fiscal year,” Sony chief executive Nobuyuki Idei said. “At the end of the fiscal year, we were able to achieve results that surpassed our most recent forecast.”
Shares of Sony rose $2.16, or 4 percent, to $56.14 in morning trading on the New York Stock Exchange.
For the quarter ended in March, Sony recorded a net loss of 5.5 billion yen ($43 million), compared with income of 15.8 billion yen the same quarter the previous year, largely on losses and restructuring expenses in the electronics sector. Sony also suffered losses at affiliates, it said.
Sales totaled 1.88 trillion yen ($14.6 billion), down 2.3 percent from a year ago.
For the fiscal year, sales declined 3 percent in Sony’s electronics sector at 5.3 trillion yen ($41 billion) on weak demand and intensifying price competition. Overall results were helped by a 52 percent surge in sales in its video-game unit, centered around healthy demand for PlayStation 2 consoles and games.
Sales in the game segment for fiscal 2001 totaled 1 trillion yen ($7.8 billion), up from 660 billion yen the previous year. Operating income from games totaled 83 billion yen ($643 million), a positive reversal from 51 billion yen in losses a year ago.
It generally takes time for the video-game business to take off as manufacturers initially take a loss on selling the sophisticated machines until volume picks up and profits can be raked in from selling game-software.
Sony also did better in its film division, posting sales of 636 billion yen ($4.9 billion), up 14.5 percent from a year ago, and operating income of 31 billion yen ($240 million), more than seven times what it recorded the previous year.
Film offerings such as “A Knight’s Tale,” “America’s Sweethearts” and “Black Hawk Down” fared better than some of the previous year titles, Sony said. Adding to the revenue were strong DVD sales, such as “Crouching Tiger, Hidden Dragon,” and “Vertical Limit.” “Ali” and “Riding in Cars With Boys” were money-losers. Sales at Sony Music Entertainment climbed 5 percent to 643 billion yen ($5 billion) from a year ago on hit albums like Destiny Child’s “Survivor,” Michael Jackson’s “Invincible” and Jennifer Lopez’s “J. Lo.”
But operating income from the music business dropped 1.6 percent to 20.2 billion yen ($157 million) because of the costs of worldwide restructuring and cost-reduction efforts.
Sony said its turnaround will get even stronger in the months ahead. It predicted income of 150 billion yen ($1.2 billion) for the fiscal year ending in March 2003, about 10 times its profits announced Thursday.
Sales will total 8 trillion yen ($62 billion), up 6 percent, as robust entertainment revenue from games, music and movies will offset an expected decline in electronics sales, Sony said.