Sony has slashed its annual operating profit forecast by 57 per cent to far below market expectations, citing a firmer yen and fierce price competition in the flat TV and digital camera markets.
The electronics and entertainment conglomerate earns more than three-quarters of its revenue overseas, making its earnings susceptible to any substantial foreign exchange moves.
Sony revised its assumed euro/yen exchange rate to 140 yen from 160 yen for the October-March second half. The new level, however, is still far from the actual rate of around 124.8 yen today, stoking investor worries about further outlook cuts.
The company now expects operating profit of 200 billion yen for the year ending next March, down from its previous projection of 470 billion yen.
The latest figure is down 58 per cent from a year earlier and compares with a consensus of 381.8 billion yen in a poll of 20 analysts by Reuters Estimates.
Sony changed its dollar/yen assumption for the second half of the business year to 100 yen from 105 yen.
Sony lowered its full-year net profit forecast by 38 per cent to 150 billion yen, and trimmed its sales outlook by 2 per cent to 9 trillion yen.
Besides the yen's appreciation, Sony said the global economic slowdown is expected to hurt the profitability of its LCD TV, compact digital camera and camcorder operations.
Sony's chief financial officer Nobuyuki Oneda is set to speak to a news conference on the earnings revision later today.
Reuters