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Sony Unveils $280 Million Profit Despite Movie Losses

Sony Thursday unveiled a net profit of $280 million for the three months to September, the second quarter of its financial year. That came despite growing losses at its ‘Pictures’ division.

The corporate-level profit compares with a loss in the comparable period last year, and was achieved on largely flat sales and operating revenues of $15.8 billion. The corporate level improvement came largely from reduced losses in mobile communications and despite losses at the “Pictures” division.

The movies and TV division lost $187 million in the quarter, down from a loss of less than $10 million in the same period last year. The division’s revenues were largely unchanged at JPY184 billion when expressed in the Japanese currency, but represented a 14% decrease in US dollar terms.

Sony said that the sales drop was largely due to decreases in home entertainment revenues and lower TV licensing revenues. it blamed the divisional losses on the revenue shortfall and “higher worldwide theatrical marketing expenses due to a greater number of significant theatrical releases in the current quarter as compared to the same quarter of the previous fiscal year.

That has led Sony to cut its forecast for the Pictures division’s full year outlook. It is now forecasting sales and revenues of JPY1 trillion for the 12 months to March 2016, compared to a previous forecast of JPY1.02 trillion, and to JPY879 billion last year. It is still forecasting an overall operating profit for the division in the full year, but only JPY35 billion. Where Sony had previously been forecasting an increase to JPY64 billion for the Pictures division’s operating profits, it is now forecasting a fall from last year’s JPY58.5 billion.

Sony cut back on its involvement in the mobile phone handset business last year with a strategic decision to stop competing with the market leaders in mass market products. Revenue dropped by 15% in Japanese Yen terms to $279 billion ($2.33 billion), and net losses fell sharply to $172 million.

For the six months to September corporate level revenues were a little changed JPY3.70 trillion, or $30.8 billion when expressed in dollars. Net income for the six months was $967 million (JPY116 billion) compared to a similar sized loss (JPY109 billion) at the same stage last year.

The corporate level financial guidance was last revised in July and was left unchanged. For the year to March 2016, Sony is forecasting a 4% sales decrease at JPY7.9 trillion. At the profit level is forecasting a more than $2 billion turnaround. Net income is forecast at JPY140 billion, compared with a net loss of JPY126 billion in 2014-15.

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