Sony Sees Worse-than-expected Annual Loss

(RTTNews) - Japanese consumer electronics company Sony Corp. (SON.L, SNE) Thursday said it expects full-year loss to be worse than it had previously projected, citing some expenses it would incur in the PC business it is exiting, and impairment charges to be recorded in the overseas disc manufacturing business.

The company currently expects full-year net loss attributable to stockholders of 130 billion yen ($1.27 billion), compared with the previous estimate of a loss of 110 billion yen issued in February. In the prior year, the company had reported a profit of 43 billion yen.

Operating income is now projected to be 26 billion yen, while the previous view was for 80 billion yen. The company reported operating income of 230.1 billion yen in the year ended March 31, 2013.

Sony has been going through troubled times, amid slump in demand for its once-coveted products. The company's outlook for loss and operating income issued in February was itself a downward revision form the forecast provided in October 2013.

The company now expects sales and operating income of 7.77 trillion yen, marginally higher than the previous estimate of 7.70 trillion yen. Year-over-year, sales are projected to increase 14.3 percent from last year's 6.8 trillion yen.

Sony expects to record about 30 billion yen in additional expenses in the fiscal year related to its exit from the PC business.

It was on February 6 that Sony said it would exit the PC business. PC sales for the fiscal year ended March 31 and expected PC sales for the fiscal year ending March 31, 2015 are underperforming the expectation of February.

As a result, Sony expects to record write-downs for excess components in inventory and accrual of expenses to compensate suppliers for unused components ordered for its spring PC lineup.

In addition, some restructuring charges are expected to be recorded ahead of schedule.

Yet, Sony noted that there has been no significant change to the expected total charges relating to its withdrawing from the PC business, as the increase in the costs recorded in the fiscal year ended March 31, 2014 will be offset by lower costs in the fiscal year ending March 31, 2015 and that the company would not incur promotional costs.

Further, Sony expects to record about 25 billion yen in impairment charges mainly related to its overseas disc manufacturing business.

According to the company, as demand for physical media is contracting faster than expected, mainly in the European region, the future profitability of the disc manufacturing business has been revised.

Consequently, Sony does not expect to generate sufficient cash flow in the future to recover the carrying amount of long-lived assets, resulting in the expected impairment charge.

The company is scheduled to announce consolidated results for the fiscal year ended March 31 and the forecast for the fiscal year ending March 31, 2015 on May 14.

The stock closed up 1 percent in Tokyo on Thursday at 1,810.00 yen.