International. Sony has been aggressively implementing a strategy to reform its electronics business since April 2012. As a result of these measures, losses in the TV business, which reached 147.5 billion yen* in the fiscal year ended March 31, 2012 ("FY11"), were reduced to 69.6 billion yen in FY12, and an even greater reduction is expected, to approximately 25 billion yen in FY13.
However, it anticipates that the goal of regaining profitability from the TV business will not be achieved during the fiscal year ending March 31, 2014 ("FY13"). Mainly due to unforeseen factors such as the slowdown in emerging markets and the decline in exchange rates.
Therefore, the Company has decided to carry out the additional reforms, with the intention of establishing a structure capable of generating stable profits at the beginning of the fiscal year that ends on March 31, 2015 ("FY14").
First, Sony will change its product mix and focus on increasing the sales proportion of high-agama models in FY14. It plans to reinforce the company's leadership in the 4K market and also reinforce 2K models with a wide range of colors and image enhancement technologies. In emerging markets, it will aim to take advantage of market expansion by developing and launching models tailored to the specific needs of each market.
Second, it will accelerate and expand its ongoing cost reduction and measures to achieve operational improvement, focusing its attention on all functions related to the TV business, including manufacturing, sales and indirect/Headquarters functions.
In addition, it has decided to separate the TV business and operate it as a wholly-owned subsidiary. The time frame for this transition is July 2014.
Following the implementation of these measures, Sony anticipates a reduction in employee payroll of approximately 5,000 (1,500 in Japan and 3,500 outside Japan) for FY14 purposes.
To carry out these measures, Sony is allocating an additional 20 billion yen in restructuring costs in FY13 and an additional 70 billion yen in restructuring costs in FY14, seeking an annual fixed cost reduction of more than 100 billion yen at the beginning of FY15.
