Sony has today published its FY16 expectations for the Group and its segments. These forecasts were delayed by a month, following the Kumamoto earthquakes in Japan which affected Sony’s operations in the region.
What we are most interested in is the mobile segment and despite a huge fall in smartphone volumes last year, Sony is not expecting any bounce back in FY16. Sony expects it will sell 20 million Xperia smartphones in FY16, which compares to the 25 million it sold last year – a 20 percent drop.
Sony cites the decline is due to lower mid-range sales as the company focuses on the high-end. Also, Sony has exited a number of unprofitable regions which has also brought the number down. This magnitude of volume decline is broadly reflected in the lower sales estimate of 940 billion yen, representing a 17 percent year-on-year decline.
However, despite the lower volumes, Sony is anticipating a small profit in FY16 of 5 bn yen, compared to a loss of 61 bn yen last year. This is expected to be driven by an improved product mix of phones sold and significant cost savings.
Sony comment on new revised mobile expectations
Mobile Communications – Sales are expected to decrease year-on-year due to a reduction in mainly mid-range smartphone unit sales reflecting an increased focus on high value-added models, as well as a reduction in smartphone unit sales in unprofitable geographical areas where downsizing measures were implemented during the fiscal year ended March 31, 2016. Operating results are expected to improve significantly year-on-year and operating income is expected to be recorded due to an expected improvement in product mix, cost reductions primarily reflecting the benefit of restructuring initiatives and a reduction in restructuring charges, partially offset by the above-mentioned decrease in sales. The impact of the 2016 Kumamoto Earthquakes is expected to be immaterial.