An unfortunate trend when it comes to Sony’s financial results, is that we often see a downward revision to the number of expected smartphone units to be shipped that year. In FY14, we saw three cuts to Xperia unit estimates, in FY15 we saw two cuts during the year and already in FY16 we have now seen two cuts.
Sony had expected to sell 20 million units in fiscal year 2016, but then cut that estimate to 19 million units earlier in the year. Sony released its Q2 FY2016 results this morning and has now further cut the estimate by 11 percent to 17 million units. This results in a 7% downward revision on mobile revenues for the full year to 780 billion yen.
Thankfully, profits are expected to remain at 5 billion yen, despite the sales cut. Sony attributes this to a “better-than-expected improvement in product mix resulting from a concentration on high value-added models”, as well as cost cuts. Whilst it is great to see the focus on profits, it is concerning that Sony unable to drive unit growth in the smartphone space, even when coming from such a small base.
Looking at the Q2 FY16 results themselves, Sony Mobile saw sales decline by 34% on a constant currency basis to 168.8 billion yen. The magnitude of year-on-year decline was similar to that seen in fiscal Q1 and represents a “reduction in mid-range smartphone unit sales, as well as a reduction in smartphone unit sales in unprofitable regions where downsizing measures were implemented during the previous fiscal year”.
Sony also managed to post a Q2 FY16 profit of 3.7 billion yen (37 million U.S. dollars) during the quarter mainly due to cost cuts, lower restructuring costs, positive foreign exchange impact and a better product mix.