Sony was once one of the market leaders in electronics, with games consoles such as the Playstation and its state of the arts television sets a feature of a large percentage of homes in the UK.
However, thanks to increasing competition from rivals including South Korean giant Samsung monopolising the smartphone market, and the need to lower prices in order to remain competitive taking a toll on profit margins, the Japanese firm has somewhat fallen on hard times during the past decade.
Yet this news has drastically changed this week, with Sony posting its first annual profit in five years. Net profit totalled 43 billion yen (or £280 million) in the 12 months to March 31st – a marked improvement on the previous year, when a 457 billion yen loss was recorded.
Sony puts this change of fortune down to a boost in asset sales and the yen’s recent drop in value. This economic change benefited both foreign buyers and the company itself, as purchase costs are lower and profits rise thanks to the repatriation of foreign earnings in the buyer’s country.
Unfortunately, industry experts are not convinced that the firm’s sudden rise in fortune is down to products and an advantageous exchange rate – in fact, some have claimed the results have been heavily skewed by changes to Sony’s core business model.
According to them, the turnaround could be due to the restructuring programme the business has been undergoing in a bid to make it an attractive prospect to consumers once more.
Key commercial property assets, such as the US headquarters in New York and the “Sony City Osaki” building in Tokyo have been offloaded, while non-property assets such as shares in medical research firm M3 have also helped boost capital.
Altogether, asset sales amounted to a sum of $2.5 billion last year – a figure which has significantly contributed to Sony’s rise in earnings.
Eurotechnology Japan analyst Gerhard Fasol certainly believes that the asset sales “really need to be subtracted from the results to understand the regular operating results”.
He added that, when figures under the surface were examined, electronics sales remained weak and this must be addressed before the Japanese firm can hope to become a leading light in the electronics industry once more.
Speaking about the results, Sony chief financial officer Masaru Kato insisted that “We were determined to do whatever possible to get into the black this year.”
Previous Post
Manchester Office Market on course for Recovery
