Tokyo (AFP) – Sony on Thursday halved its full-year profit forecast as it was battered by a near $1 billion writedown on its movie unit while a strong yen also dug into the Japanese firm’s bottom line.
The dour reading comes as the once-iconic entertainment giant struggles with a painful restructuring drive that has included layoffs and asset sales after years of huge losses.
It said net profit in the nine months to December 31 plunged 80.7 percent to 45.6 billion yen ($405 million) and warned it expected to see a full-year figure of 26 billion yen.
The April-March estimate is sharply down from the 60 billion yen tipped in October, which was itself a reassessment of an initial 80 billion yen total.
It said operating profit halved in the nine-month period after booking a $962 million writedown in its movie unit following a series of weak box-office returns and a plunge in home entertainment business as viewers turn increasingly to streaming sites.
“We as management take seriously that we had to book the significant impairment loss,” Sony Chief Financial Officer Kenichiro Yoshida told a news briefing.
The writedown was flagged on Monday and comes weeks after the departure of Michael Lynton as head of the entertainment division after 13 years.
“Entertainment is very important to Sony, so I want to see what kind of approach they take to turning it around,” Tachibana Securities analyst Kiyoto Utsumi said ahead of the release, according to Bloomberg News.
“The loss in movies is already known, so rather than dwell on it we should begin to shift our gaze toward the next fiscal period.”
Revenue slipped 9.3 percent, which the firm said was “mainly due to the impact of foreign exchange rates”, adding that the yen rose about 14 percent on-year against the dollar and euro during the period.
Sony also cited losses linked to the sale of its battery business as a factor driving down operating profit.
The mobile segment, which the firm is scaling down, also continued to struggle as smartphone sales in Europe remained weak, while the memory chip unit was also hit by currency fluctuations.
However, the PlayStation 4 provided a bright spot as surging sales of the console and a slew of new titles helped the gaming division post a 5.2 percent rise in revenue.
“Its game sector will remain a strong earnings driver, while the TV and camera businesses are steadily recovering,” said Yasuo Imanaka, an analyst at Rakuten Securities in Tokyo.
“One concern is the fate of its film division as the head of Sony Entertainment steps down,” Imanaka said before the earnings announcement.
“Sony still needs to make a crucial decision on whether to continue its mobile phone business, which heavily depends on domestic demand.”
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