EXCLUSIVE: Sony Australia has reported a $201 million dollar slump in sales during the past financial year, profits have gone from $49 million in 2009 to a loss of $9 million in 2010.The fall has been attributed to aggressive marketing by Samsung, LG and Panasonic that forced Sony to start discounting across their entire product portfolio.
Overall sales declined from $924 Million in 2009 to $722 Million in 2010 due to falling sales of Bravia TVs, Vaio notebooks and digital cameras. Also contributing to Sony’s woes was rampant discounting that saw the once premium brand slug it out with discount brands for market share.
During the past 12 month Sony, who now manufacture 80 percent of their TVs via Chinese companies, was forced to drop a major Soccer World Cup promotion in Australia due to 3D TV supply problems. While this did not impact the latest financial results it could impact the 2011 results. During the 2010 financial year Sony Australia saw a significant fall in sales of their Bravia TVs as consumers rejected the brand in favour of TVs from the likes of Samsung, LG and Panasonic.
At one stage during the past financial year Sony dropped to 4th place in TV sales according to GFK data, however in recent months the company has clawed back market share. They now fluctuate between second and third.
In an effort to stop the slump in TV sales Sony Australia, initiated a combination of discounting and bundling in an effort to boost flagging sales. The move, which is believed to have cost them profits, failed to deliver topline sales growth.
During a recent interview Sony Australia CEO, Carl Rose, said: “Bundling allows Sony to provide benefits and solutions as opposed to focusing on individual product features. Some customers just say ‘This is a great deal’ buy something and get something free. If we do our job properly, it encourages consumers or retailers who then encourage consumers to think about more than just one product working in isolation”.
Rose admits that Sony is collecting data from consumers who have registered their free consoles or Blu-ray players. He puts this down to being a database for upgrades as opposed to being a marketing database for direct selling in the future.
“The benefit is that it gives us an installed base, and with the nature of the PS3 we can provide firmware upgrades”.
Their latest financial results which were filed last week with the Australian Companies and Securities Commission reveal that $4.9 Million has been allowed for service warranty claims. This follows recalls of their Vaio notebooks which were found to overheat.
A note on the Sony Australia web site earlier this year said: “Recently, we became aware of a potential issue affecting Vaio notebook models VPCF115FG, VPCF116FG and VPCF117HG, available on the Australian market since January 2010.”
This was not the first time that Sony has suffered quality problems with their Vaio notebooks which are made by third party manufacturers in Asia.
Sony Australia, who sacked 32 people 18 months ago has cut their salary bill from $34 Million in 2009 to $28 Million in 2010. During this period several executives have quit Sony and in some cases have not been replaced.
Missing from this year’s report is the total amount that Sony spent on marketing. In 2009 Sony Australia disclosed their marketing expenditure.
In comparison, Samsung saw revenue jump from $1.29 Billion in the 2008/2009, to $1.6 Billion in 2009/2010 financial year.
Profits for the local Samsung subsidiary climbed to $24.2 Million in 2010 up from $16.10 Million in 2009.
LG Electronics Australia had revenues of $980 Million and profits of only $13K.