Sony Financial Report Q1 FY2017 - Profits Up as Camera Sales Recover

  • Overall company Revenue rises +15.2% year-on-year
  • Overall company Operating Income rises +180.5% year-on-year
  • Imaging Products & Solutions segment Revenue rises +27.3%
  • Imaging Products & Solutions segment Operating Income rises 309%

Overall Company Results

Sony financial report for Q1 FY2017 shows an improved overall Revenue but especially a return to much better Operating Income. Some one-time hits and gains have distorted the figures but still, the underlying picture is positive. The impact of last years Earthquake has now turned from a negative cost to an insurance gain. Also, the disposal of a camera module subsidiary has flipped a -¥20.3B loss into a +¥27.5B gain in Operating Income.

Exchange rates have been more stable this year so they have had little effect in the overall figures so far this financial year.


Imaging Products and Services Segment Results

Cameras are our main interest here and how well Sony has done in what has been a very challenging time for the photographic equipment business. The effects of last years Kumamoto Earthquakes were largely behind but would there be a latent demand for Cameras that would kick-in this spring?

The Imaging Products and Solutions (IP&S) segment, Revenues are up by +27.3% to ¥155.6B and Operating Income by +309% to ¥23.2B.

Total Camera Sales

Digital camera unit sales came in at 1.3m compared with 0.8m the previous year for the same quarter. Given last years poor results with just 4.2M cameras sold this is a positive move. Full year forecast is for a reduction to 4M units. Sales by value of still and video cameras with lenses are up from ¥75.5B in 2016 to ¥105.9B for the same period.

Digital Camera Market Share

Taking market size data from the largest camera brand, Canon, the total size in 2017 (calendar year) of the fixed and interchangeable lens camera market was 24M units. Sony is predicting sales of 4M units giving them 16.6% of the market by units. Canon, on the other hand, estimated sales of 9M units or 37.5% of the camera market by units. (Sony financial year is Apr to Mar where Canon is Jan to Dec, so this is approximate)

Forecasts

Full year forecast for the Imaging segment are for camera unit sales to decrease from 4.2M to 4.0M units but better than the previous forecast of just 3.8M units. The whole segment will improve current sales by value to ¥650B from the previous forecast of ¥640B due to improved exchange rates.

Operating profit for the Imaging segment has been forecast to improve to ¥72B for the full year. This is up from the previous forecast of ¥60B and much better than the last FY2016 of ¥47.3B.

Conclusions

The global digital camera industry has seen huge problems in 2016 exacerbating an already shrinking market. We have seen a much better performance so far in 2017 even though predictions are still for a slight contraction.

Overall the company look sound and able to invest in years to come to keep the Imaging segment ahead of the game. Unit sales of Cameras are holding up although the financial improvements are coming due to more expensive products rather than unit sales. Competition is very strong at the high end of the market and they may struggle to increase sales.

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