Sony halves forecast as yen, movie unit hammer profit

Tokyo (AFP) - Sony on Thursday halved its full-year profit forecast as it was battered by a near $1 billion writedown on its movie unit while a strong yen also dug into the Japanese firm's bottom line.

The dour reading comes as the embattled entertainment giant struggles with a painful restructuring drive that has included layoffs and asset sales after years of huge losses.

It said net profit in the nine months to December 31 plunged 80.7 percent to 45.6 billion yen ($405 million) and warned it expected to see a full-year figure of 26 billion yen.

The April-March estimate is sharply down from the 60 billion yen tipped in October, which was itself a reassessment of an initial 80 billion yen total.

It said operating profit halved in the nine-month period after booking a $962 million writedown in its movie unit following a plunge in the home entertainment business as viewers turn increasingly to streaming sites.

"We as management take seriously that we had to book the significant impairment loss," Sony chief financial officer Kenichiro Yoshida told a news briefing.

Sony's cinema woes, which included box-office disappointments such as "Ghostbusters" and "Inferno", a sequel to the "Da Vinci Code", came as online movie distribution becomes increasingly popular, depressing the financial value of DVDs and BluRays.

The writedown was flagged on Monday and comes weeks after the departure of Michael Lynton as head of the entertainment division after 13 years.

"Entertainment is very important to Sony, so I want to see what kind of approach they take to turning it around," Tachibana Securities analyst Kiyoto Utsumi said ahead of the release, according to Bloomberg News.

Revenue slipped 9.3 percent, which the firm said was "mainly due to the impact of foreign exchange rates", adding that the yen rose about 14 percent on-year against the dollar and euro during the period.

Sony also cited losses linked to the sale of its battery business as a factor driving down operating profit.

The mobile segment, which the firm is scaling down, also continued to struggle as smartphone sales in Europe remained weak.

- PlayStation 4 -

Sony's semiconductor business, projected to see annual operating losses, was hit hard by the high yen along with serious damage to a factory in southern Japan caused by deadly earthquakes in April.

Sony, with its international business portfolio, could also reap benefits from yen strength, Yoshida said, while pledging to improve the semiconductor and movie operations.

"What is desirable is for foreign exchange to stabilise," Yoshida said.

Sony's PlayStation 4 provided a bright spot as surging sales of the console and a slew of new titles helped the gaming division post a 5.2 percent rise in revenue.

"Its game sector will remain a strong earnings driver, while the TV and camera businesses are steadily recovering," said Yasuo Imanaka, an analyst at Rakuten Securities in Tokyo.

The fate of its film division was a concern, particularly with Lynton's departure, Imanaka said before the earnings announcement.

Sony also needs to reform its mobile business, which heavily depends on domestic demand, he added.

The Japanese currency has weakened significantly since the election of US President Donald Trump in November as the dollar gained on expectations for his pro-growth economic agenda.

That led Japan's Panasonic to revise up its full-year profit and revenue outlook.

The electronics company said Thursday it expected net profit to come in at 130 billion yen for the fiscal year through March, up from its earlier estimate of 120 billion yen.

It also raised its full-year revenue expectation, seeing sales at 7.35 trillion yen, up from the earlier 7.2 trillion yen.

For the nine months to December, Panasonic recorded net profit of 175.4 billion yen, up 9.5 percent from the same period last year thanks mainly to one-off tax-related gains.