Mon, Oct 03, 2011 | 05:01 BST
Sony anticipating “huge impact” on earnings due to falling euro
Sony has revealed that it is expecting its earnings to be impacted heavily by the falling value of the euro and is unable to protect itself from the effects.
According to Bloomberg, Sony’s corporate treasurer Hiroshi Kurihara stated in an interview last week that the Japanese tech giant is unable to protect itself from the euro’s decline due to the fact that Sony purchases the majority of its components from Asia, where suppliers require payment in dollars, and very few from Europe.
“There are no countermeasures that we can take for the moment,” Kurihara said. “There is a huge impact on our earnings.”
The situation is heightened due to the weakening of Sony’s biggest export market. According to Yoji Takeda, of Hong Kong based investment management firm RBC, even as companies take various measures against exchange rate fluctuations, “it’s going to be tough for those with higher sales ratios in Europe,”
Luckily for European gamers, the decline will not mean an increase in the recommended retail prices according to Kurihara. “It’s difficult to raise prices in Europe due to the competition with Korean makers,” he said. “We can’t run away from currency risk as long as we sell overseas.”
The euro has declined in value due to the European debt crisis, which currently puts the euro at a decade-low in comparison to the Japanese yen.