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Sony posts first annual loss in 14 years

The company has recorded an annual net loss of around £685m and has started laying off workers and closing plants in Japan
Written by Andrew Nusca, Contributor

Sony said on Thursday that it lost ¥98.9bn in the fiscal year through March and projected it would lose even more money this year amid a slump in consumer demand for electronics goods.

The loss is the company's first annual net loss in 14 years. The manufacturer of Bravia flat-panel TVs, Cyber-shot digital cameras and Vaio computers also said it will close three plants in Japan this year to help turn its business around. That brings the total number of factories it is closing globally to eight through March 2010 and leaves 49 Sony factories worldwide.

Sony is also in the process of cutting 16,000 workers from its payrolls.

Sony lost ¥165bn (£1.1bn) in the January-March quarter, compared to a ¥29bn profit for the same period the previous year.

The company is just the latest in a line of large Japanese corporations posting huge losses and bleak outlooks, including automaker Toyota and electronics manufacturer Hitachi.

Sony chief executive Howard Stringer has yet to offer details of a turnaround plan. The company's competition in the global downturn has only grown thanks to successes by South Korea's Samsung and Taiwan's Acer, which produce cheaper products.

The fiscal year loss was better than Sony's forecast for a ¥150bn shortfall, thanks to TV prices holding better than expected. A one-time gain from a change in Japanese tax laws also helped, the company said.

A bleak outlook remains, however, and Sony projects a ¥120bn loss for the fiscal year through March 2010.

Sony continues to lose money in its game segment, where its PlayStation 3 games console and PSP device have struggled against rival offerings from Nintendo and Microsoft.

Sales for the fiscal year fell in all key markets: Sony was down 20 percent in the US, 17 percent in Europe and 14 percent in Japan.

The three plants the company plans to close are for mobile phone cameras, video recorder parts and systems used for smart cards, respectively.

As for layoffs, Sony said it was on track with its previously announced plan to reduce 8,000 of its 185,000 jobs around the world, and trim another 8,000 temporary workers who aren't included in the global work force tally.

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