On Tuesday Sony reported a steep drop in its operating and net profits for its fiscal second quarter. Analysts say the sale of Sony’s battery business and the strong Japanese yen hammered the company’s bottom line.
For the second quarter ended September, the Japanese electronics company said operating profit fell to ¥45.7 billion ($436 million) from ¥88 billion during the same period in 2015. In the third quarter, Sony recorded a net profit of ¥4.8 billion, compared with ¥33.6 billion the previous year.
What can explain the poor performance? Sony attributed it to “booking the bulk of the ¥33 billion in one-time losses stemming from the sale of its battery arm,” according to The Wall Street Journal. Sony said it booked ¥32.8 billion of the impairment charge in the second quarter.
On Monday Sony lowered its earnings forecast for the fiscal year that ends in March 2017, citing the sale, and saying it would earn a net profit of ¥60 billion, down from a previous expectation of ¥80 billion. Further, the Japanese electronics maker adjusted down its operating-profit outlook to ¥270 billion from ¥300 billion. The change stemmed from its decision to sell the group’s battery unit to Murata Manufacturing Co. for ¥17.5 billion, a deal which is expected to close by April.
At the time, Sony said Sony said the weak results were also partly due to cooling handset sales, as well as lower profits from sales of image sensors because of the strong yen. The sensors are mostly sold overseas; they are a component for cameras in smartphones and are made in Japan. The image-sensor unit recorded a ¥4.2 billion operating loss in the quarter.
Since January, the Japanese yen has risen from around ¥120 to the U.S. dollar in to around ¥104.9 to the dollar Tuesday.