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Sony Corp. (SNE)
F1Q10 (Qtr End 6/30/10) Earnings Call
July 29, 2010 09:00 am ET
Masaru Kato - EVP and CFO
Yasuo Nakane - Deutsche Securities
Kaito Arosawa - Citigroup
Yuji Fujimori - Barclays Capital
Masahiro Ono - Morgan Stanley
Kazumasa Kubota - Okasan Securities
Previous Statements by SNE
» Sony Corporation Q2 2010 Earnings Call Transcript
» Sony Corporation Q1 2010 Earnings Call Transcript
» Sony Corp. F3Q10 (Qtr End 12/13/09) Earnings Call Transcript
Good evening ladies and gentlemen. Now on my part I would like to begin by explaining the contents of today’s announcement. The improvement in the results during the second half of the previous fiscal year continue during the first quarter with result significantly exceeding our May forecast.
The benefit of our restructuring efforts has manifested itself and we have successfully launched new competitive products causing our results to steadily improve.
Operating results for the current quarter were a profit ¥67 billion a major improvement over ¥25.7 loss of the same quarter previous year. The Consumer, Professional & Devices segment and the Network Product & Services segment contributed significantly and the TV, game and Sony Ericsson mobile phone businesses all recorded a profit for the quarter.
The quarters operating results significantly outperformed our forecast we announced in May at the fiscal year results announcement. As a result, even though we raised our euro exchange rate assumption for the remainder of the fiscal year from ¥155 million to significantly higher ¥110 level, we have revised, our forecast for the full year consolidated operating income ¥25.10 billion in net income attributable to Sony shareholders was recorded in the first quarter at positive turnaround from the loss of the same quarter previous year. Next let me talk about P&L, consolidated sales for the quarter increased by 4%.
The negative impact of exchange rate was about ¥73 billion and on a local currency basis sales increased by 8%. Consolidated operating income of ¥67 billion was recorded with a positive strength, from the loss of the same quarter previous year due great performance of the consumer professional and devices segment and the network products and services segment.
The non operating income improved by ¥19.1 billion due to the recording of the net performing exchange Yen compared to a net foreign exchange loss of the same quarter previous year. As a result ¥78.9 billion in income before income tax estimates recorded compared to ¥32.9 billion loss in the same quarter previous year.
The effective tax rate during the quarter was ¥55 the reason, this rate exceeded Japanese Statutory Tax rate was mainly because we revised our estimates on the final outcome of bilateral APA on transfer pricing based on the most recent government to government negotiation and thus recorded additional tax expenses.
Net income attributable to Sony shareholders was ¥25.7 billion compared to a net loss of ¥27.1 billion in the same quarter previous year. Now we will explain segment results. First I would like to briefly explain a change in our segment reporting to reflect the change in our organizational structure as of the April 1.
We have repositioned the operation of the B2B and disc manufacturing segment. B2B operations have been incorporated into the consumer products and devices segment which was renamed the Consumer, Professional & Devices segment. Disc manufacturing operation is now included in all other.
On this slide you can see the change in each segment sales and operating results for this quarter. Sales in the consumer professional devices segment increased 7% primarily due to an increase in the early sales of LCD TVs. Operating income ¥50.1 billion was recorded a significant improvement over the loss recorded in the same quarter previous year. This was mainly due to an improvement in the cost of sales ratio higher gross profit from the increased sales and they grow our restructuring charges.
Despite the increase in SG&A and negative FOREX impact the primary factors causing the change in the results included as you see on the slide was a positive factor and the negative factors excluding the impact of restructuring changes product categories would improve results, includes sale contracts which benefited from the higher sales of (inaudible) and the television with higher sales. TV business sales increased 23% to ¥292 billion due to a 60% increase in LCD TV unit sales to 5.1 million units excluding restructuring charges ¥3 billion in the operating income was recorded and improvement of ¥11 billion compared with the ¥8 billion loss this was due to the increase in unit sales reductions in materials under cost and benefit of restructuring although prices declined.
In the March 2011 fiscal year we aim to turn our profit despite the price declines and the negative impact of exchange rates by reaching our goal of 25 million units through the expansion of highly appealing new models and models which meet the characteristics of each region, by continuing to reduce costs and improvement expenses.
Compact Digital Camera sales were flat year-on-year, but operating income increased slightly due to increased unit sales and improved expenses including a the reduction in materials costs and although FOREX rates and price declines had a negative impact and we increased an advertising and promotion expenses, expense sales of comparative models, video camera sales have decreased due to the negative impact of exchange rate and price declines while operating profit increased primarily due to improved expenses.