Sony Financial Report Q2 FY2017 - Solid Results Across the Board

  • Overall company Revenue rises +22.1% year-on-year
  • Overall company Operating Income rises +346.4% year-on-year
  • Imaging Products & Solutions segment Revenue rises +15.7%
  • Imaging Products & Solutions segment Operating Income rises +26.9%

Overall Company Results

Sony financial report for Q2 FY2017 shows big improvements in both overall Revenue and Operating Income compared to the same period the previous year. Some one-time hits and gains in the previous year have distorted the figures and made Operating Income this quarter look very good. Taking those out the gain would still be +130.5%, so still very positive.

Consolidated Sales Revenue for Q3 2017 was ¥2063B compared with ¥1689B the previous year, and Operating Income was ¥204.2B compared to ¥45.7 the previous year. So one of the best Q2 results for a number of years.

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 the resurgence in demand for Cameras continue through the summer?

The Imaging Products and Solutions (IP&S) segment, Revenues are up by +15.7% to ¥156.7B and Operating Income by +26.9% to ¥18.9B from the previous bad year. This makes for a much more consistent performance and a good base to go into peak season.

Total Camera Sales

Digital camera unit sales came in at 1.1m compared with 0.8m the previous year for the same quarter. To put this in context, it is much better than the Earthquake affected Q2 2016 but considerably less than the 1.6m cameras of Q2 2015.

Sales by value of still and video cameras with lenses are up from ¥81.5B in 2016 to ¥99.3B 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 24.9M units. Sony is predicting sales of 4.2M units giving them 17% of the market by units. Canon, on the other hand, estimated sales of 9.5M units or 38% 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 is for camera unit sales to return to 4.2M. The previous forecast was to decrease to 4.0M units. Unfortunately, the rise in units does not come with any rise in Revenue or Profit. So that's 200K cameras extra Sony will have to produce 'free and gratis', ouch!.

Operating profit for the Imaging segment has been forecast to improve to ¥72B for the full year, the same as the previous forecast. Foreign exchange has been very kind over this quarter and much of the gains in Revenue and Profit can be put down to this.

Conclusions

The global digital camera industry has seen huge problems in 2016 exacerbating an already shrinking market. Sony has performed well and consistently over the first half of FY2017. Investment in new cameras is reaping dividends and solidifying Sonys market share.

Overall the company looks well balanced and all sectors showing growth. Shares have taken off since these results were published.

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