Sony soaring on a windfall
Sony reported a better-than-expected rise in second-quarter profits due to a pensions windfall that offset falling prices in electronic products and high restructuring charges.
The electronics giant announced a 52 per cent rise in operating profits to Y65.9bn (£320m) for the three months to 30 September, although sales remained the same as last year at Y1,703bn.
Despite this, it kept its forecast for the full year to March 2006 of a Y10bn net loss. This was revised a month ago, when it started its three-year restructuring programme involving the axing of 10,000 jobs and the closure of 11 underperforming manufacturing plants.
Sony’s electronic division, which accounts for two thirds of its revenues, has recently fared badly as the group was late to catch on to the popularity of flat-screen televisions. While rivals Matsushita and Sharp were providing increasingly cheaper flat TVs, Sony was still buying key components from outside providers, making it difficult to cut prices quickly and keep up with competition. It was only in mid September that Sony entered a joint venture with Samsung to manufacture liquid crystal display (LCD) panels for its new Bravia LCD televisions.
The division’s operating profit for the second quarter more than doubled to Y17.3bn thanks to a Y64bn gain from the transfer to the Japanese government of the substitutional portion of Sony’s Employee Pension Fund. Without the pensions windfall, the electronics division would have posted a loss of Y47bn. But chief operating officer Nobuyuki Oneda said: “Since the launch of our Bravia LCD TV models, we have already captured some 30 per cent market share in America in the first week of October.”
The group’s film unit swung into a Y6.6bn loss due to the absence of a hit movie, but the games division made a very slight profit of Y8.2bn (£40m) because of strong sales from its PlayStation Portable (PSP) handheld game device. The shares were down by more than 1 per cent to Y3,740.
