Sony Reports Record Sales, Profit for Fiscal ’96

TOKYO — Boosted by a weaker yen, strong demand for its consumer electronics products and sharply improved performance by its pictures group, Sony Corp. on Thursday reported record sales and profit for fiscal 1996.

Sony’s U.S. sales surged 30%, helping push consolidated net profit up 157% to an all-time high of $1.12 billion in the year ended March 31, Managing Director Sumio Sano announced at a Tokyo news conference. Global sales hit $45.7 billion.

“Overseas sales rose significantly in all geographic areas due to [strong performance by] both the electronics business and the entertainment business,” Sano said. Worldwide sales were up 23% and sales in Japan rose 15%.

Home-use camcorders, MiniDisc systems, color televisions, computer displays, the PlayStation game console and software, cellular phones and lithium-ion batteries were among the key products contributing to the good performance, Sano said. Electronics sales overall rose 24%.

Revenues from Sony’s entertainment business jumped 23%, with the music group up 14% and the pictures group up 38%. In U.S. dollars, sales for Sony’s entertainment units totaled $8.3 billion, with operating income at $534.4 million. Sales for the music group were $4.7 billion in U.S. dollars, with Sony’s pictures group recording $3.5 billion in sales.

“Television operations, including U.S. network prime-time, daytime and game show programming, the success of sell-through videos ‘Jumanji,’ ‘Fly Away Home’ and ‘Matilda,’ and licensing agreements of Sony Pictures Entertainment’s filmed entertainment library” played key roles in the picture group’s strong performance, Sano said.

“ ‘Jerry Maguire,’ which has grossed $150 million at the U.S. box office, also contributed to the year’s results,” he said. “All these positive factors in addition to the yen’s depreciation more than offset the disappointing box-office results of several films released during the year.”

Sony officials cited a dearth of indigenous pop hits last year in Japan. On Thursday, Sano said the “most notable” contribution was made by Celine Dion’s “Falling Into You,” which has sold more than 21 million copies since its March 1996 release. Multimillion-selling new releases for the year also included music by Jamiroquai, Pearl Jam, Julio Iglesias, Rage Against the Machine, NAS, Babyface and Gloria Estefan, he said.

Sano attributed about $4.2 billion of Sony’s increased global sales--or 49% of total sales growth for the year--to the effects of the weaker yen, which averaged 112 yen to the dollar in fiscal 1996 compared with 95 yen in fiscal 1995. A weaker yen makes Japanese exports more competitive in dollar terms and more profitable in yen terms. It also boosts profits in yen terms from products produced and sold overseas.

Prospects for more Sony profit growth this year look good, with the dollar trading recently at about 125 yen.

The dollar weakened Thursday in Tokyo, however, trading at 123.77 yen after a senior finance ministry official told a parliamentary committee that the yen “could theoretically appreciate to 103 yen to the dollar over the next year.” The comment was taken as a warning that Japanese monetary authorities might become more aggressive in taking steps to bring down the value of the dollar.

In forecasting its sales and profit for the year ending March 31, 1998, Sony assumed an exchange rate of 115 yen to the dollar. On that basis, it predicts that global sales this fiscal year will rise to $53 billion and consolidated net income will hit $1.4 billion.

Sano called that projection “conservative.”