Sales revenues at Sony Pictures in the three month period dropped by 13% in U.S. dollar terms (but showed a 9.1% increase when expressed in the weakened Japanese currency), due to a painful combination of lower TV licensing, a weaker home entertainment business and smaller theatrical revenues. In particular the poor B.O. performance of “White House Down” weighed on the results.
In the most recent quarter the Pictures division went from profits of JPY7.9 billion to losses of JPY17.8 billion ($182 million at current exchange rates).
For the six month period the Pictures division scored a 14% revenue drop in constant currency terms. It saw net income of JPY3 billion replaced by an operating loss of JPY14 billion ($138 million). In the first quarter Pictures scored a $41 million operating profit. In the second a $181 million loss.
In several previous years motion pictures have been the bright spot for the beleaguered conglom while the electronics manufacturing lagged, but the upturn in electronics is slow in coming and chief financial officer Masaru Kato said: “The profit environment for the electronics business will continue to be difficult.”
The corporation altered its April 2013 to March 2014 full-year guidance from a net profit of JPY50 billion ($512 million) to JPY30 billion ($307 million).
Expressed at current exchange rates Sony Corp. showed revenues up by 11% from JPY1.60 trillion to JPY1.78 trillion ($18.1 billion) for the three months. But with the Japanese Yen having weakened by 20.5% over the comparable period, the results are weaker when expressed in US dollar terms.
Net losses in Yen worsened from JPY15.5 billion to JPY19.3 billion. Expressed in adjusted dollar terms the second quarter net loss was an almost unchanged $195 million.
For the six month April to September 2013 period revenues increased in Yen terms by 12% to JPY3.48 trillion, but decreased 6% in constant currency terms. Net losses were JPY15.6 billion, compared with JPY40 billion in the first half of last year.
The group blamed its poor operating profit performance on “a significant decline” at Sony Pictures, partially offset by strong smartphone sales and currency gains. It also received a $49 million insurance payout relating to the 2012 floods in Thailand which damaged factories.
The games division saw revenues up by 5% to JPY156 billion (but down 14% on a constant currency basis) or $1.56 billion. Small operating profits of JPY2.3 billion were replaced by losses of JPY800 million ($8 million) as it made a strategic price cut for the PlayStation Vita.
Revenue at Sony Music was essentially flat ($1.1 billion) but profits perked up ($99 million) thanks to currency exchange rates and solid sales for Justin Timberlake’s “The 20/20 Experience” and a handful of other releases.
Commenting on the TV manufacturing business Sony’s Masaru Kato said: “We have made steady progress in cutting costs…The October-December period will be the most important. We want to move toward profit by getting good results from expanding sales of high-valued-added 4K televisions.”
He added that “The audio-visual and information technology industries, including PCs, TVs, digital cameras and camcorders, are facing a tough situation in terms of market and prices. So we have reduced our annual unit sales forecast for these products. We will be able to achieve our goal of moving into the black, but the scale (of the earnings) will be smaller by several tens of billion of yen.”
He concluded by saying “We are devoting management resources to our core businesses of digital imaging, mobile devices and games…The market environment is tough, but by getting good results in these core areas, as well as by using offensive and defensive strategies to improve our performance in targeted businesses, we plan to move into profit by the next period.”