Sony poised for bigger earnings

Tokyo. – Sony Corporation forecast its highest earnings in 20 years as Chief Executive Officer Kazuo Hirai uses games, image sensors and entertainment to revive the electronics maker. Operating profit will reach $4,2 billionin the year ending March 2018, the Tokyo-based company said yesterday. That’s the highest since 520 billion yen in 1998, according to data compiled by Bloomberg, when income was fuelled by MiniDisc players and the first “Men in Black” movie.

Stressing profitability instead of volume growth and shifting away from PCs and TVs has helped Hirai step closer to turning around Sony through areas where it has an advantage, such as PlayStation 4 consoles and sensors used in smartphones.

Chief Financial Officer Kenichiro Yoshida’s restructuring of operations and move to make division heads more accountable, are helping win back credibility for a company that cut its earnings outlook 15 times in the past seven years.

“Even more important than the numerical targets is that the company’s transformation from the Sony of yesterday continues apace,” said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo. “They should sell the TV and mobile phone operations and focus on businesses that can make the most of the strengths they have in devices and entertainment content.”

The forecast is 25 times the size of the 20 billion yen operating profit Sony is projecting for this year. Sony shares closed at 3,174.50 yen before the announcement. The stock has surged 28 percent this year, compared with a 5.3 percent rise in the benchmark Topix index.

Yoshida will add the role of executive deputy president from April, Sony said. Vice chairman Masaru Kato, medical business president Tadashi Saito and head of human resources Kunitaka Fujita will all resign after the annual shareholder meeting in June.

Sony, which is headed toward its sixth net loss in the past seven years on a writedown of its phone unit, wants its primary performance indicator to be return-on-equity, which measures earnings compared with shareholder equity.

Hirai set a target of more than 10 percent for fiscal 2017, a return the company hasn’t had since posting 10,8 percent in the 12 months ended March 2008, according to data compiled by Bloomberg.

Hirai said Sony aims to revive dividend payments from next year.

The company on Wednesday affirmed its forecast for the business that makes sensors, camera modules and memory storage to post sales of as much as 1,5 trillion yen in the year ending March 2018. The business is expected to have an operating margin of 10 percent to 12 percent. – Bloomberg.