TOKYO — Shares of Sony Corp. continued their climb to new highs on the Tokyo Stock Exchange (TSE) on Monday, buoyed by expectations of a strong first-quarter earnings report, which will be released Thursday.
Sony shares closed at a record high on the TSE of 11,300 yen, up 500 yen from Friday’s close. Traders said expectations of a 30% to 60% rise in Sony’s operating profits was behind the rally.
Last May, Sony tallied a record group pretax profit for the 1996 business year that ended March 31, 1997. The depreciation of the yen and strong across-the-broad sales increases helped propel the company to a 126.1% profit jump from the previous fiscal year.
For the 1996 fiscal year, Sony posted a 15.3% increase in sales in Japan to tally $12.83 billion, while U.S. sales were up 30.1% to $13.22 billion and European sales jumped 23.8% to hit $10.52 billion. Shares of Sony on the TSE hit a record high at 9,800 yen prior to the May release of the 1996 fiscal year earnings report.
Strong sales in the audiovisual sector — which includes its Hollywood studio subsidiary — along with a weakened yen are seen as the two main factors leading to a strong earnings report for Sony.
The earnings results of the April/June quarter for the next business year, which ends March 31, 1998, will be released Thursday. Analysts said the electronics company is expected to post an operating profit in the range of 70 billion or 80 billion yen ($608.6 million or $695.7 million), topping the 55.32 billion yen reached in the first quarter of the last fiscal year.
Meanwhile, Sony’s American Depositary Receipts (ADRs) hit a 12-month high Monday, boosted by a weaker yen and a strong earnings outlook, traders said.
The Japanese electronics giant closed up $3.875, at $97.75, a 12-month record. Volume was more than twice normal levels.
Based on Sony’s close of 11,300 yen on the Tokyo boards and the exchange rate of the yen to the dollar, the ADRs finished $1.75 above where Sony ended in Tokyo, said Val Kosmider, head of international equity trading at Schroder Wertheim in New York.
The yen’s slump against the dollar has led to a surge in the stock of major Japanese exporters such as Sony.
“There is just a great deal of enthusiasm about owning these things that have a lot of revenues that are not in yen,” Kosmider said.
About 70% of Sony’s sales are in overseas markets, and the company is one of the greatest beneficiaries of a depreciation in the yen.