Major Vendors Reports Profits For Quarter

By Steve Smith -- TWICE, 8/2/2010

NEW YORK — Earnings season began as July ended, and there was positive news, if not outright growth, from four major consumer electronics manufacturers.

Sony, Panasonic and Sharp all reported improved quarterly performances. And while LG Electronics did not see its profits increase in the quarter ending June 30, it also posted a profit.

Here are highlights from key manufacturers:

Sony turned a profit in its fiscal first quarter and reported higher overall sales partly due to sales increases in LCD TVs and computers.

Sales and operating revenue was 1.661 trillion yen ($18.7 billion), up 3.8 percent in yen for the quarter. Net income was 25.7 billion yen ($289 million), a turnaround from a 37.1 billion yen loss in last year’s opening quarter.

However, the company warned that unfavorable exchange rates could hurt the company going forward. For instance, Sony said that during the quarter, the average rate of the yen was 91 yen against the U.S. dollar and 115.5 yen against the euro, which was 5.8 percent and 13.5 percent higher, respectively, than the previous year’s fi rst quarter.

Sony’s consumer, professional and devices segment operating income was 889.5 billion yen ($9.99 billion), up 7 percent, and operating income was 50.1 billion yen ($563 million), compared with a loss in the prior year of 8.9 million yen. Growth was due in part to increased unit sales of LCD TVs.

In its networked products and services segment, sales and operating revenue was 325.9 billion yen ($3.66 billion), up 32.4 percent, but the operation posted a loss of 3.8 billion yen ($43 million), which is an improvement from the prior year’s loss of 36.7 billion yen. The sales increase was due to PC and PlayStation3 sales.

Panasonic reported consolidated group sales for the first quarter increased 35 percent to 2,161.1 billion yen, from 1,595.5 billion yen in the first quarter of fiscal 2010 (a year ago), growing sales in all segments.

Net income was 43.7 billion yen, a dramatic shift from its 53.0 billion yen loss during last year’s first quarter.

In its digital AVC networks unit, sales 8 increased percent to 831.7 billion yen, from 773.3 billion yen a year ago, Panasonic reported, despite sales decline of mobile phones, this was due primarily to strong sales of flat-panel TVs, Blu-ray Disc recorders and automotive electronics.

Operating profit “significantly improved,” the company said, to 27.9 billion yen, from operating loss of 13.6 billion yen a year ago. Panasonic also reported it would spend up to $9.36 billion to turn subsidiaries Sanyo Electric and

Panasonic Electric Works into wholly owned units of the company to increase efficiencies and take full control of its rechargeable lithium-ion batteries and solar-panel businesses.

Sharp reported a net profit of 10.69 billion yen in its fiscal first quarter, ended June 30, in a dramatic swing from the operating loss of 25.2 billion yen the prior year.

Net sales were up 24 percent to 741.6 billion yen for the quarter.

The consumer/information products group had sales of 480.3 billion yen, up from 11.2 percent over last year.

LG Electronics still posted a profit in its second quarter but it was less than last year.

LG reported a net profit decline by 33 percent in the fiscal second quarter, to 856 billion won, from 1.28 trillion won in the same period last year.

Overall sales were down 0.7 percent in the quarter, and operating profit plunged 90 percent from the year-ago period, coming in at 126.2 billion won.

While sales of TVs and plasma panels rose 19 percent in the quarter and the home entertainment unit remained in the black, the division’s operating profit declined sharply, to 28.1 billion won from 267.8 billion won in last year’s Q2.

LG cited declining average selling prices as a result of competition among set makers for the decreased profitability.

LG’s mobile communications division reported a sales decline of 29.5 percent year to year, leading to an operating loss of 133 billion won.

One bright spot for the company was the home appliance unit, which posted a healthy 16.5 percent growth in sales year to year and a profit of 185 billion won, up from 178 billion won a year ago. — Additional reporting by John Laposky