Sony Sold 41% Fewer TVs in FY Q1 Than in Year-Earlier June Quarter
Sony shipped 1.3 million TVs globally in its fiscal Q1 ended June 30, 41% fewer than in the year-earlier quarter and 19% below the volume in fiscal Q4, reported the company Friday. The TV unit sales decline forced a 4% year-over-year revenue decrease in Sony’s core consumer tech sector.
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The global business environment has worsened "significantly" since Sony’s May forecasts, “and there are concerns that the global economy will further decelerate, primarily due to recent rapid inflation and monetary policies several countries are pursuing to respond to it,” Chief Financial Officer Hiroki Totoki told a media briefing Friday in Tokyo. “We are working to identify the impact of these business environment changes and take prompt action to address them as a top priority in the management of our business.”
The fiscal-year forecast Sony disclosed Friday “incorporates this impact to a reasonable degree based on current circumstances,” said Totoki. Though Sony raised its sales target by 1% from the May forecast for the year ending March 31, operating cash flow is expected to be 22% lower than projected three months ago, he said.
In Sony’s core consumer tech segment of Entertainment, Technology & Services (ET&S), Q1 sales declined 4%, mainly due to the decrease in TV unit sales “resulting from the impact of lockdowns in Shanghai and worsening market conditions, partially offset by the favorable impact of foreign exchange rates,” said Totoki. ET&S segment sales are projected for the year to rise 2% higher than in the previous forecast, “primarily due to the impact of foreign exchange rates, partially offset by our incorporating the risk of market deceleration into our forecast for the second half of the fiscal year,” he said.
Sony’s Q1 operating income performance in ET&S “significantly exceeded” its May forecast, “due to a faster than expected improvement in the utilization of our manufacturing facility following the Shanghai lockdown and a faster than expected improvement in supply constraints for components,” said Totoki. “On the other hand, new risks such as the global economic slowdown, especially in Europe, and the adverse effects of the strong dollar on our financial results have recently become apparent,” he said.
Sony plans to “apply the upside of the profit we enjoyed in Q1" to mitigate those risks, plus “implement additional measures such as improvements in product mix and cost controls in anticipation of even more risks,” said Totoki. The ET&S inventory level at the end of June was “a little high, even when we exclude the increase in valuation of the inventory due to the depreciation of the yen and the strategic stockpile of parts that we are concerned about procuring,” he said. “We plan to adjust that level in preparation for the expected softening of demand in the product markets going forward.”
Sony is “steadily promoting the transfer of production across multiple facilities, decentralizing the production of key components and digitizing and further optimizing our operations,” said Totoki. “We will continue to strive to maintain and improve our profitability by responding swiftly to market changes.”