Profits of electronics maker Sony plummeted heavily during its fiscal second quarter, hurt by a stronger yen and charges from the sale of its battery unit.
The Japanese company reported on Tuesday that net income for the July-September quarter was 4.8 billion yen ($45.8 million), plunging roughly 86 percent from 33.6 billion yen posted a year ago.
It reported a 48 percent slump in its operating profit which stood at 45.7 billion yen (about $436 billion), down from 88 billion yen from a year earlier and missing analysts’ estimate in a Thomson Reuters poll by 1.2 percent.
Sony had on Monday trimmed its annual profit outlook, citing losses from the sale of its battery business. It reduced its profit forecast for the full year to 270 billion yen, a drop of 10 percent from a previous estimate of 300 billion yen.
The slump in operating profit during the second quarter was largely driven by an impairment charge of 32.8 billion yen from the sale of the manufacturer’s battery unit.
A stronger yen was another weakening factor. Sony’s earnings were hurt by appreciation of the Japanese currency against the U.S. dollar, rising to 104.76 on Tuesday from roughly 120, according to CNBC.
The Japanese company is enjoying increased demand for its imaging sensors which are used in mobile devices. This contributed immensely while the company was undergoing restructuring to shift focus from low-margin consumer products.
“Demand for (camera) sensors from smartphone manufacturers, including Chinese players, has been strong,” said Kenichiro Yoshida, chief financial officer at Sony. “We are also receiving many inquiries for the next year.”
Damage caused by the Kumamoto earthquake, which led to the closure of a major factory used for its money-spinning imaging sensor business, also contributed to the decline in profit.
The hit to sensor production by a series of earthquakes earlier in the second quarter of 2016 led to a loss in Sony’s semiconductor business. The division posted a loss of 4.2 billion yen in the second quarter, compared to 34.1 billion in operating profit a year earlier.
It took half a year for sensor shipments to return to normal, the company said.
Yoshida revealed that Sony was also considering diversifying into the auto market. He said auto parts supplier Denso Corp would adopt the company’s sensors, although the Sony CFO stated that “it will take three to five years before shipments of automotive sensors begin in earnest.”
The Japanese electronics manufacturer’s gaming business reported a 20 percent on-year decline in operating profit, partly as a result a stronger yen and fall in PlayStation 3 sales. But investors are expecting the recent launch of the PlayStation 4 Pro, an upgraded version of the company’s flagship game console, to boost sales during the coming holiday shopping season.
Sony has also released a virtual reality (VR) headset which is expected to perform well on the market, given how more friendly-priced it is compared to rival offerings.
The electronics giant, which has been working in recent years to focus its offerings in the smartphone market in the higher-end section, swung to profit in its mobile division. It posted a profit of 3.7 billion yen in the second quarter, compared to a 20.6 billion yen loss a year ago.