Sony suffers sales fall due to supply chain

4 August 2011

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4 August 2011 | Angeline Albert

Supply chain issues as a result of the tsunami and earthquake in Japan have affected electronics firm Sony’s first quarter profits, forcing the company to examine further ways to cut costs.

The Japanese company’s financial results for the first quarter ending 30 June revealed sales fell by 10 per cent compared to the same quarter last year to ¥1.4 billion (£11.5 million).

Sony said the decrease was primarily due to a drop in sales of LCD televisions, which were affected by the Tohoku earthquake in March, the deterioration of the sector and unfavourable exchange rates.

Both consumer products and services and the professional, device and solutions divisions of the company were affected by the earthquake in the quarter just past, caused by “issues such as constraints in the supply chain and lower production capacity due to damaged manufacturing equipment”.

In March, SM reported Sony had to suspend manufacturing at some plants in Japan due to shortages of raw materials, components and power following the earthquake. The factories hindered by shortages make camcorders, digital cameras, lenses, mobile phones, headphones and televisions.

Kaz Hirai, head of Sony’s consumer electronics business, told reporters in Tokyo this week that the company needed to be more aggressive in reducing costs. He said the firm is preparing to overhaul its loss-making TV business with plans to reorganise the section’s procurement operations to reduce costs and become more competitive.

In a webcast about the results, Sony said: “The TV business has continued to make a loss. The cost reduction efforts have harvested some results. Going forward we will continue to reduce the costs. We need to improve the cost strategy to keep pace with the lower sales.”

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