Sony Corporation this morning reported quarterly profits ending 30th June were down 74.3% from the same period last year. The poor results were attributed to a strong Japanese Yen, as well as the Kumamoto earthquake in mid-April which forced a temporary production halt.
Sony reports major losses in earnings
Sales & operating revenue fell to ¥1,613.2bn, down 10.8% from the ¥1,808.1bn recorded for the same time period the prior year.
Operating income decreased as much as 42% compared to the same quarter in 2015, to stand at ¥56.2bn.
Net income attributable to stockholders dropped from ¥82.4bn to ¥21.2bn – a staggering 74.3%. Income per share fell even further, by 76.6%, from ¥70.36 recorded in the same quarter in 2015 to ¥16.44 in this quarter.
Kumamoto earthquake weighed heavy on revenues from camera sensor production
Earlier this year the earthquake in Kumamoto strongly affected the corporation’s production of cameras, which weighed heavily on quarterly earnings. The earthquake of a magnitude of 7.0 on the Richter scale shocked the city in the early hours of the 16th April. Sony had to shut down its predominant factory for the production of CMSO sensors, security cameras and micro-display devices for close to four weeks to investigate damages and complete repairs. The halt in production caused major delays and losses in deliveries of products to a multitude of camera manufacturers including Nikon and Leica.
In its’ latest earnings report Sony estimated the total impact of the earthquake at a loss of ¥34.2bn. ¥26.1bn are attributed to opportunity losses, ¥6.8bn to physical damage and ¥1.3bn to recovery expenses and miscellaneous costs.
Strong Japanese Yen depresses income from exports
Income of the multinational corporation was also negatively impacted by the continuous strength in the Japanese Yen which weighs heavy on income from exported goods. The Yen has been rising in value against the USD and other major currencies such as the GBP over the past year. The UK’s vote to leave the European Union last month reinforced this movement.
In addition, it looks as if the Yen is set to continue its’ rally further as this morning’s release of the BoJ’s decision to leave interest rates unchanged sparked a new rise in the strength of the JPY today.
While sales from semiconductors, the segment most largely affected by the earthquake in Kumamoto recorded losses of 22.9%, sales revenues from Imaging Products and Solutions fell as much as 25.8% compared to the same quarter the prior year, 8% of which were attributed to the impact of foreign exchange. Earnings from components fell as much as 22.7% with the impact of foreign exchange being estimated at 9%.
Highest decrease in sales revenues was recorded for the mobile communications segment which saw a 33.7% decrease from ¥280.5bn the same quarter in 2015 to ¥185.9bn in the three-month period ending the 30th June 2016. However, the company could for the first time record green figures in operating income for this segment.
Operating income now stands at ¥400million, up ¥23.3bn from – ¥22.9bn in the same period last year. This reflects the successful heavy reductions Sony has previously undertaken in this sector to make it a profitable competitor.
In the corporations most profitable segment, Game & Network Services the company documented increases in income from sales of 14%, to stand at ¥330.4bn. Operating profits were up ¥24.6bn to stand at ¥44.0bn.
Share prices rise on forward guidance
In the forecast on full year results for 2016, Sony signalled to mostly be on track to deliver expected results predicted in May. It adjusted sales & operating revenues down 5.1% to a total of 7,400bn but kept operating income as well as net income to shareholders flat at 300 and 80 respectively.
Sony Corporation’s share prices responded with by opening 1.82% up from previous market close at ¥3,250. Over the day the share price yo-yoed but finished up 2.82% at ¥3,282 by market close in Japan.
