People, including us, having been putting the boot into Sony since 2003, when it had a sudden and calamitous move into losses referred to as the Sony Shock. Now multiple Sony managements later, it has recorded an annual profit for the year to March 31, its first in five years, and looks in ruthless form to deal with all of its past inadequacies.
It recorded revenues of $72.35 billion up 4.7% mostly because it now owns all of what used to be the Sony Ericsson handset business. It had operating income of $2.45 billion, and a net income of $458 million. A lot of the changes are brought about by fairly radical financial manipulation, and some across the board improvements, like the sale and leaseback of its NY HQ, and other US buidlings.
Obscurely in the one market where Sony seemed to have had almost no problems, that of imaging and cameras, its profits have fallen apart, down 92% to $15 million on revenues of $7.8 billion. It says that the compact digital camera market is contracting. In its guidance for next year it says that sales are expected to increase again due to demand rising in broadcast and high end products, perhaps as the movie industry gears up for 4K video.
The PlayStation Games business was in a similar state, with revenues down 12% to $7.5 billion, which it expects to come back strongly with the launch of the PS4 later this year. Profits were also down over 90% here to $18 million.
But where Sony has experienced most of its troubles, in portable music devices, TVs and handsets, things are on the up. Sony consolidated the phone business and merged it with the PC business, and it did a $1 billion loss, plus Sony recorded another $1 billion, due to the payment it made to Ericsson to buy out its prior phone partner. But net of that sales were up 18%. Sony has new ranges out across the board and expects higher sales and praised its new Xperia Z, which it says has had huge customer acceptance.
Home Entertainment Systems were perhaps the most impressive turnaround, taking in TVs and home music systems and of course Blu-ray and DVDs. Revenue was down 22.5% to $10.6 billion, but losses were about 40% of the disaster they were last year, at $897 million. Sony is hoping for a comeback here by being one of the first companies to support 4K systems globally. Some of this improvement is down to owning less of the S-LCD TV screen joint venture with Samsung, which is now into heavy losses ‘ another aggressive move that has worked out for the new management.
Devices are defined as semiconductors and components, and here revenues are off by 17.3% to $9 billion, but Sony recorded a profit of $467 million, against a loss of about half that size last time. Sony got out of a few large scale display businesses and sold a lot more image sensors, which has been the natural outcome of its long term camera leadership. Essentially this is expected to be flat next year.
Sony Pictures has been a success this year, with revenues up 11.4% and operating profit up 40% to $509 million, a lot of which is down to Spiderman merchandizing rights. Music is flat for the year at $4.7 billion and profits too at around $396 million and it is much the same at Financial services, the banking and pensions group it runs purely in Japan.
Sony has been on the back foot for ten years, and its new, highly pragmatic management team is beginning to turn the ship around after the massive losses it wrote off in 2011, and we could expect it to re-emerge as a genuine innovator once again over the next two years.