Sony ships 9.9 million units in Q2; lowers full-year forecast as it retreats from China

Sony has released its second quarter results this morning for the three months to the end of September 2014. As expected, it doesn’t make for pretty reading when it comes to the mobile segment. Sony recorded a 176 billion Yen ($1.6 billion) goodwill impairment in the MC (Mobile Communications) segment during the quarter, related to its mid-range portfolio.

This led to a loss for the whole Group of 86 billion Yen ($785 million), which compares to a profit in the same period last year of 14 billion Yen. Sales for the Group were up by 7% to 1,902 billion Yen. However, the MC segment saw sales decline by 4% on a constant currency basis to 292.4 billion Yen. Interestingly, Sony brought particular focus to the fact that this sales decline was attributed to “mainly Japan” – a traditional stronghold for Sony’s mobile business.

Sony reported broadly flat year-on-year smartphone shipments in Q2 with 9.9 million units sold (10m last year). It also confirmed that marketing and R&D expenses were higher during the quarter “in order to expand sales channels.”

Recent reports suggested that Sony would cut its full-year smartphone forecasts and this proved to be correct. Sony has cut its forecast from 43 million units to 41 million units, a 5% decrease. Remember, this number had already been cut from 50 million units in the summer. Sony attributed this decline “due to an expected decrease in the annual unit sales of smartphones mainly in China.”

“We are at a phase where we need to rebuild our shaky earnings. We are planning a significant reduction in China,” Chief Financial Officer Kenichiro Yoshida said to the FT.

This still implies that Sony needs to deliver 11% year-on-year growth in second-half smartphone shipments if it wants to hit that target, so if things don’t improve you could see that number see a further downgrade.

Xperia phones shipped