Sony cuts FY17 profit forecast on impairment for battery unit sale
- NDA convenes all-party meeting today, ahead of winter session of Parliament
- Markets LIVE: Sensex, Nifty trade lower, Tata Communications shares rise 5%
- PM Modi commissions Scorpene-class submarine INS Kalvari into Indian Navy
- Rupee strengthens against US dollar in opening trade
- Aadhaar, world’s biggest biometric database, grows in India despite doubts
Tokyo: Sony Corp. cut its annual profit forecast by 10% after taking an impairment on the sale of its battery unit in the latest move by the consumer electronics giant to focus on its most lucrative businesses.
Operating income will be 270 billion yen ($2.6 billion) in the year ending March, down from a projected 300 billion yen, the firm said on Monday. Analysts had earlier expected 307.5 billion yen of earnings this fiscal year, according to the average of estimates compiled by Bloomberg.
Sony agreed to sell its battery unit to Murata Manufacturing Co. for about 17.5 billion yen and also transfer 8,500 workers, resulting in a 33 billion yen impairment for its components business. The company had announced the sale in July without disclosing a price, but warned the deal would likely negatively impact earnings. The charge was less than some analysts expected, with Credit Suisse Group AG predicting a 40 billion yen writedown earlier this year.
“It’s very positive because it’s one division that has been underperforming,” said Amir Anvarzadeh, Singapore-based head of Japanese equity sales at BGC Partners Inc. “8,500 employees is a lot of employees for a loss-making division. And now they’ve transferred all of them to Murata.”
Chief executive Kazuo Hirai has narrowed the scope of operations to focus on profitable businesses. He has relied on games, the largest unit by revenue, to keep investors happy as he deals with the fallout from April’s earthquakes in Japan, which hit the production of camera modules.
The company also cut its net income forecast for the year by 25 percent to 60 billion yen, but maintained that sales will total 7.4 trillion yen.