The switch from feature phones to smartphones, fierce competition and the cost of restructuring Sony Mobile has led the manufacturer to post a loss of €1.15bn (£923.5m).
In its annual results for the year to 31 March, sales fell by 12.4% to €5.29bn (£4.25bn). In its 2011 financial year, the division had net income of €74m (£59.4m).
The company blamed the sales decline on its focus on smartphones and the lower number of feature phones shipped. It also blamed the falling revenue on earthquakes and floods in Asia last year, which lead to component shortages. It said its losses were caused by a decrease in shipments, 'intense smartphone competition', and higher restructuring charges, up to €88m (£70.67m) from €51m (£41.0m) in 2011. However, the bulk of Sony's losses comprised a valuation allowance of €654m (£525.1m) against Swedish tax assets.
Looking ahead, the company said it predicts sales for Sony Mobile will increase 'significantly' due to higher smartphone sales. It added it expected its operating loss to decrease 'significantly', due to a product mix improvement and reduction in costs. However, it warned 'severe competition' in the smartphone market would continue.
Sony's wider business reported a record loss of ¥456.7bn (£3.56bn), although it said it expects to return to profit this year.
Editor: Graeme Neill