Sony Corp. profits are challenged by weakening emerging-market currencies such as the Brazilian real and the Indian rupee that are cutting the value of overseas sales repatriated to Japan.
The world economy hasn’t improved to the level that’s “ideal” for Sony, Chief Executive Officer Kazuo Hirai told reporters in Tokyo today. Sluggish economies and falling emerging-market currencies are among its “major challenges,” he said.
“As our businesses in emerging markets become a larger part of our portfolio, exchange rates there have lost balance, which may impact our profit,” Hirai said.
The yen has strengthened 14 percent versus the rupee and 12 percent against the real in the past six months. Sony is continuing to promote reform and cost-reduction efforts, Hirai said. The company is forecasting back-to-back annual profit after one-time gains that included the sale of its New York headquarters helped it end four straight years of losses in the 12 months ended March.
Japan’s iconic consumer electronics maker is introducing new products such as the $399 PlayStation 4 to be introduced next month in the U.S., a new flagship smartphone and 65-inch ultra high-definition televisions to boost sales during the year-end shopping season.
In August, the Tokyo-based company raised its full-year sales forecast 5.3 percent to 7.9 trillion yen for the year to March 2014, citing a weaker yen against the euro. Sony, which is expected to post a 23 percent increase in net income to 53 billion yen for the year ending in March 2014, is set to report second-quarter earnings on Oct. 31.
Sony’s electronics businesses together posted about 130 billion yen in operating losses last fiscal year as TV and mobile devices lost money, Chief Financial Officer Masaru Kato said in May. Sony plans to make the TV unit and mobile-phone unit profitable this fiscal year.
The TV unit alone has lost almost $8 billion in the past nine years amid competition from South Korea’s Samsung Electronics Co. and LG Electronics Inc. The world’s No. 3 TV maker’s market share in terms of revenue rose to 8 percent in three months ended June 30 from 5.2 percent in the previous quarter, DisplaySearch said last month.
The maker of Bravia TVs plans to sell 15 million units this fiscal year, up from 13.5 million units sold in the previous year, it said in August.