Sony reported an 86% plunge in quarterly net profit on Wednesday, with its electronics products business being particularly hard hit by the coronavirus pandemic.

For the fourth quarter, Sony’s net income declined to 12.6 billion yen ($118 million) from 87.9 billion yen earned a year ago. Operating profit dipped 57% to 35.4 billion yen ($331 million) while sales and operating revenue fell a combined 18% to 1.7 trillion yen ($16 billion).

Analysts had expected an operating profit of 73.77 billion yen on average.

Sony’s electronics products segment posted an operating loss of 38.9 billion yen as sales fell 24.8% to 483.4 billion yen. Consumer demand for electronics has collapsed amid retail lockdowns while Sony was also hurt by factory closures and supply chain disruptions.

CFO Hiroki Totoki said the consumer electronics division “has been hardest hit right now” by the pandemic “but the impact will expand to other businesses as well.”

The company now expects operating profit for fiscal 2020 to drop at least 30% to its lowest level in four years. It fell 5% to 845.5 billion yen for the year ended March 31.

In New York trading Wednesday, Sony shares dropped 4.7% to $62.57.

As the Associated Press reports, “The spread of COVID-19 has crimped consumer spending, shut movie theaters, canceled events and sent share prices falling — all damaging for a company with sprawling businesses like Sony.”

According to Sony, the pandemic delivered a 35.1% hit to operating income from electronics in 2019 and a 28% hit to financial services profit due in part to losses on securities at Sony Bank and an increase in the provision of policy reserves at the life insurance business.

Sales of image sensors, a key growth driver for Sony, increased 20.2% to 231.2 billion yen while operating profit jumped 70% to 34.5 billion yen. But Totoki said profitability could decline as the COVID outbreak could cause a shift away from high-end smartphones with multiple-lens cameras that often use the group’s advanced image sensors.

Sony controls 51.5% of the world’s $15 billion image sensor market, according to Gartner.

Tomohiro Ohsumi/Getty Images

, , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *