This summary is based on the second quarter fiscal 2008 earnings call conducted by Sony Corp. (SNE) on October 29, 2008.
Management:
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EVP and CFO: Nobuyuki Oneda
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Senior General Manager, IR: Gen Tsuchikawa
Key Investors Issues
- Consolidated sales decreased 0.5% to ¥2,072.3 billion from ¥2,083 in the prior year.
- Income decreased by 72% to ¥20.8 billion or ¥20.74 a share from ¥73.70 billion or ¥73.50 a share in 2007.
Half Year Highlights:
- Sales dropped 0.2% to ¥4,051 billion.
- Net income was ¥55,793 billion or ¥55.60 a share, down 60.2% from ¥140,170 billion from ¥139.79 a share in 2007.
Second Quarter Highlights
Consolidated sales decreased 0.5% year-on-year to ¥2,072.3 billion from ¥2,083 in the prior year due to decline in sales in electronics and game.
- Operating income decreased 90% to ¥11 billion due to the impact of the decline in the Japanese stock market on the Financial Services segment and the recording of a gain the previous year from the sale of former headquarters site.
- The impact of the decline in the Japanese stock market on the Financial Services segment, expanded from about ¥9 billion in 2007 to ¥50 billion.
- Non-operating income deteriorated by ¥1.2 billion to negative ¥3.7 billion mainly due to the recording of ForEx losses compared to ForEx gain in the same quarter of the previous year.
- Due to all these factors, income decreased by 72% to ¥20.8 billion or ¥20.74 a share from ¥73.70 billion or ¥73.50 a share in 2007.
Segment Highlights:
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Elecronic segment decreased by 1% due to the negative impact of the appreciation of the yen against the dollar.
- Sales to outside customers increased by 2% year-on-year, and on a local currency basis, increased by 8%.
- Sales of BRAVIA LCD televisions, which saw increased in itself in all regions; VAIO PCs, which saw increased sales outside of Japan; and Alpha digital SLR camera, which had an expanded line-up and increased market share, increased.
Operating income decreased by 41% primarily due to a deterioration of the cost of sales ratio as a result of a decline in unit selling prices and the decrease in equity in net income for Sony Ericsson.
- Operating income, excluding equity in net income of affiliated companies, on a previous basis decreased by 30%.
- The largest profit generating product categories were, in the order of magnitude, system LSI, video cameras, imaging sensors, broadcast and professional equipment, and compact digital cameras.
- Operating income decreased because although the local currency sales increased had an ¥18.7 billion positive impact.
- Price declines in such categories as compact digital still cameras and PCs, as well as changes in the composition of certain product categories caused deteriorations in the overall cost of sales ratio for the segment, ¥32.7 billion negative impact.
The categories which had the largest decrease in profit were compact digital still cameras, PCs, and video cameras.
- Compact digital still cameras had a decrease in profit due to a decreased unit sales resulting from a slowdown in market growth in North America and Europe, and due to price declines.
- The PC had a decrease in profit due to intensification of competition and a shift toward lower priced products.
The sales for the TV category increased by 19% year-on-year to ¥355 billion and operating performance improved by ¥13 billion to a loss of ¥9 million.
- Video cameras had a decrease in profit due to decreased sales in all regions due to a contraction of the market.
- Profit increased from LCD TVs, which had a significant increase in unit sales, and from imaging sensors, which saw an increase in sales of CMOS sensors and improvement of operations.
- Inventory was ¥1,086.5 billion, which is an increase of 8% compared to the same time last year.
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Sony Ericsson sales decreased by 10% year-on-year due to the impact of exchange rate fluctuations and the shift of the product mix to lower price performance.
- A loss before tax of 13 million euro was recorded, a significant deterioration year-on-year mainly due to continued pricing pressure at a time of adverse cost trends, and continuing the difficult competitive environment particularly in Europe.
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Game sales increased by 10% with approximately 80% of sales coming from hardware and accessories, and the rest from software.
- Overall hardware sales increased due to a year-on-year increase in PLAYSTATION 3 and PSP unit sales.
- Sales of PS2 decreased, but the business continues to be strong in the Middle East and Asian regions.
- Unit sales were 2.43 million, 1.9 times the amount of the same quarter of the previous year and the firm is on track to towards the goal of selling 10 million units for the year.
