Adele boosts Sony’s earnings

SINGER Adele spearheaded growth in sales and operating profit at Sony’s music division, helping it boost margins to become Sony’s most profitable nonfinancial business.

IF THERE is one person Sony shareholders should thank for the increase in operating profit last year, it is Adele.

The award-winning singer spearheaded growth in sales and operating profit at the company’s music division, helping it boost margins to become Sony’s most profitable nonfinancial business.

According to a Sony report yesterday, Adele’s album 25, released in November, was the company’s best-selling recorded music item for the year ended-March 31.

She was joined at the top of Sony’s album charts by two other British artists: One Direction and David Bowie, whose album Blackstar was released days before his death in January.

A major part of Sony Music’s success last year was its digital business, which grew 23%, led by a 57% jump in revenue from streaming music. Digital downloads were only slightly cannibalised by the increase in streaming, with revenue there sliding 3.4%.

Music accounted for just 7.6% of Sony’s sales last year, while contributing 30% of operating profit.

Overall, music sales rose 10%, while operating profit jumped 44%. Sony says that performance will not be repeated this year: revenue will fall 11% this year, dragging operating profit down 28%.

Meghan Trainor, Sony’s No 4 artist last year, is due to release Thank You next week, and the near-term release schedule includes albums from Usher, Pitbull, Bob Dylan and Celine Dion. Given Sony’s bearishness for the year ahead, the company does not expect any of those to become a runaway success.

Sony reported an annual loss in its image-sensors business, raising fears the firm’s revival of recent years may be losing momentum, even as cost cuts helped it book its biggest annual operating profit in eight years.

Annual operating profit more than quadrupled to ¥294.2bn ($2.70bn) for the year ended March due to cost cuts in its struggling smartphone business and brisk demand for PlayStation 4 video games. But the electronics maker said its devices business including image sensors that have been central to its recovery, swung to a loss of ¥29bn from a profit of ¥89bn a year before.

Sony has been shifting attention in the past two years to highermargin products such as sensors from consumer electronics such as televisions and cellphones, under an overhaul led by chief financial officer Kenichiro Yoshida.

But a global slowdown since late last year in the market for high-end smartphones, which feature highspec cameras, has dented sensor sales. Its major clients include Apple, which on Tuesday reported its first decline in iPhone sales as it struggles with an increasingly saturated market.

“We have placed image sensors at the core of our growth story, so we take the deterioration in results there very seriously,” Mr Yoshida told a news conference yesterday.

“The smartphone market has entered a stage of slow growth,” Mr Yoshida said.

As it had previously flagged, Sony did not issue any earnings guidance for this business year, as it continued to assess the effect of earthquakes this month that halted production at its image-sensor plant in southern Japan.

The company said yesterday it expected production to resume around the end of next month.

The disruption, it said, could cause “major” opportunity losses.

In another worrying sign for the country’s recovering tech names, Panasonic forecast profit to fall in the current business year, while growth in emerging markets slows and as it spends on high-end electronics and increasingly lucrative automotive technologies.

The company said it expected operating profit of ¥375bn, down from ¥416bn in the previous year under US accounting standards.

The company had flagged the weaker outlook last month, showing that even one of the strongest of Japan’s consumer electronics companies is struggling to grow as the domestic economy grapples with weak consumer spending and slowing exports to China.

Sony reported a loss in its image sensors business, raising fears the revival of recent years may be losing momentum