Japanese electronics firms are suffering from the downturn in European consumption and the euro’s slump to a 10-year low against the yen, senior executives from Sony Corp , Panasonic Corp and Fujitsu Ltd said on Tuesday.
Sony is keen to increase the proportion of parts paid for in euros, to help ease the impact on profits from a gain in the yen against the common European currency, the company’s deputy president said at the CEATEC electronics show.
The maker of PlayStation games devices has staved off much of the damage from the dollar’s fall against the yen by hedging and procuring parts in dollars, but has been dealt a severe blow by the weakening of the euro amid the debt crisis in Greece, Kazuo Hirai told reporters at Japan’s biggest electronics show.
“Shifting all procurement purely for the sake of the euro would upset the balance of procurement, but we will move what we can,” he said, adding that such a change would take some time to complete.
The euro hit a 10-year low of 100.77 yen and stayed just above a six-month trough of 85.31 pence hit last month .
Europe is Sony’s biggest overseas market, accounting for 23 per cent of its revenue and the downturn in consumption there is hurting its sales, as well as those of rivals like Panasonic, in the run-up to the crucial year-end shopping season.
Throughout Japan, manufacturers are considering shifting production abroad as the yen’s advance shaves profits. The yen hit a record high against the dollar last month and traded at 76.63 on Thursday, up nearly 11 per cent from around 85 yen a year ago.
Nearly two-thirds of manufacturers are suffering from the impact of the strong yen as the currency’s rise threatens to derail Japan’s economic recovery from the March earthquake, a Reuters poll showed last month.
German retail sales fell at their fastest pace in more than four years in August, data showed last week , in fresh evidence of what Hirai called an “extremely challenging” environment.
Sony is struggling to compete with Samsung Electronics and other lower-cost Asian rivals.
Sony’s shares fell 0.7 per cent lower on Tuesday after shedding 4.5 per cent the previous day to end at their lowest level in 24 years.
The Japanese company has slashed its annual forecast for LCD TVs to 22 million sets from 27 million and has warned annual losses in the division might widen on the previous year.
It has already sold off TV factories in Spain, Slovakia and Mexico in the past few years and outsources more than half of production.
Both Sony and Panasonic are set to report earnings for July-September around the end of October. Samsung is set to provide quarterly earnings guidance this week.
Panasonic President Fumio Ohtsubo sounded a similar note of concern about the effect of Europe’s woes.
“It’s very tough,” he said on Tuesday. “European sales are lower than last year.” He said global sales had fallen behind the company’s expectations and that he expected a slackening off of growth in emerging markets.
Speaking at the electronics show, Masami Yamamoto, the head of IT company Fujitsu described the impact of the weak euro as “severe.”
Fujitsu is coping with currency shifts by building products in the markets where they sell them, he said.