Squeezed Sony has hopes for next half

THE downturn in worldwide consumer demand and a strong yen has triggered a sharp fall in profits at Sony, the Japanese electronics giant.

Reporting taxable profits almost halved to 27.04bn yen in the three months to 30 June, however, the company predicted that demand would pick up in the second half of the year and said the outlook was better than previously expected.

Tsunao Hashimoto, vice-president, said that operating costs had risen because of the need to control production and inventories amid ebbing demand.

Although the group's television and monitor screens enjoyed good growth, he said effort was still needed to clear inventories in areas such as audio which were not doing so well.

Mr Hashimoto said that Sony planned a marketing drive ahead of the launch of the 'Mini Disc' recordable compact disc system, due out before Christmas. 'The whole world is our market, and we consider it our own responsibility to stir up demand there,' he said.

Mr Hashimoto said that Sony expected to meet forecasts made in May when the group forecast operating profits for the year would be Y180bn. That compares with Y166bn last year, which was 44 per cent down from the previous operating profit of Y297bn.

Sony group sales of compact disc players rose to 3.4 million units in the first quarter to June 30 from 2.6 million a year earlier; those of colour televisions rose to 1.6 million sets from 1.45 million.

Sales of 8mm video cassette recorders, including camcorders, fell to 900,000 in the April-to-June period from 1.1 million a year earlier. Walkman sales also dropped slightly, to 3.6 million from 3.8 million a year earlier.

Sony's much-publicised Mini Disc is expected to be a key in reviving its fortunes, although it faces fierce competition from Philips' Digital Compact Cassette.

Sony's results coincided with those from its rival Pioneer, which reported first quarter pre- tax profits down to 9.87bn yen, a fall of 61.5 per cent.

Polygram announced the release before Christmas of its first 150 titles for the Digital Compact Cassette. They include Bob Marley's 'Legend', Elton John's 'The One' and 'Carreras, Domingo and Pavorotti in Concert'.