By Tim Culpan
April 3 (Bloomberg) -- Sony Corp., the world's second- largest maker of consumer electronics, said it probably met its earnings forecast as cost cuts offset a stronger yen.
``Although the financial markets have been very bad, growth remains stable,'' Sony President Ryoji Chubachi said at a briefing in Taipei today. He said Sony is maintaining its full- year forecasts given in January, when the Tokyo-based company projected net income would more than double to 340 billion yen ($3.3 billion) in the year ended March 31.
Sony will cut costs and expand output in countries such as Slovakia to mitigate the impact of a stronger Japanese currency, Chubachi said. The yen rose 12 percent against the dollar in the quarter to March 31, after climbing 6 percent in 2007, reducing the value of overseas earnings at Sony, which gets about 80 percent of sales from outside Japan.
``Because of the yen, we are cutting costs and carefully selecting our production locations,'' Chubachi said. He reiterated that every one-yen advance against the dollar cuts earnings by about 6 billion yen.
The company in January said it assumed a rate of 105 yen to the dollar for its forecasts. The U.S. dollar was trading at 102.76 yen as of 4:19 p.m. Tokyo time.
Sony gained 1.2 percent to close at 4,350 yen on the Tokyo Stock Exchange. The stock has dropped 30 percent this year, more than the 13 percent decline for the Nikkei 225 Stock Average.
Probably Miss
Analysts project Sony missed last fiscal year's earnings target because of the yen's gains and a slowdown in the U.S. economy. Net income was probably 329 billion yen, based on the average of 20 analyst estimates compiled by Bloomberg.
Koichi Hariya, an analyst at Mizuho Financial Group Inc. in Tokyo, estimated in an April 1 report that the strong yen reduced profit from Sony's electronics business by about 20 billion yen, leading him to forecast 310 billion yen net income for the year.
Sony sold more than 10 million liquid-crystal-display televisions last fiscal year, meeting its target, Senior Vice President Naofumi Hara said today.
The company is aiming for 15 percent to 20 percent share this fiscal year of the global LCD TV market, whose shipments are estimated at 100 million units, Hara said.
Sony's profit from its Bravia televisions fell about 70 percent to 4 billion yen in the fiscal third quarter ended Dec. 31, hurt by weaker U.S. demand. The company expects the U.S. economy to improve at the end of this fiscal year, Chubachi said.
Federal Reserve Chairman Ben S. Bernanke said on April 2 the U.S. economy may shrink in the first half of the year and that a recession is possible.
Production Shifts
Sony will move production of more liquid-crystal-display televisions to its factories in Slovakia and Russia, Chubachi said.
The company makes PlayStation 3 game machines in Chiba prefecture, near Tokyo, and Cyber-shot digital cameras in Aichi and Gifu prefectures in central Japan.
Sony also outsources production of PlayStation 3s to Taiwan's Asustek Computer Inc., the world's biggest maker of boards that connect computer parts, and cameras to Hon Hai Precision Industry Co., the largest contract-electronics maker.
Sony will strengthen its relationship with Taiwanese LCD panel makers, Chubachi said, without elaborating.
Chubachi said the company expects 50 percent of the DVD player market in the U.S. and Japan to be made up of Blu-ray machines by the end of this fiscal year, rising from 20 percent last year. Sony leads the Blu-ray Disc Association, which promotes the high-definition home-video technology.
