SONY Corp is seeing little or no sign of softening demand among US consumers for its range of digital TVs, cameras and computer goods despite a weakening economy, a top regional executive said on Tuesday.
But Sony is having to manage pressures on margins that are coming both from spiralling costs for energy and raw materials used in high-tech gadgets and from pricing overseas product costs into weaker dollars, the US official said.
"That's the problem," Stan Glasgow, president and chief operating officer of Sony Electronics told a group of reporters in San Francisco, referring to profit margin pressures.
Glasgow said the US business is doing everything it can to boost the mix of component procurement and operations it bills in dollar terms instead of other currencies. These include efforts to wring out energy savings from tighter distribution lines and simpler packaging.
Everything, that is, short of increasing US plant production at sites like its Pittsburgh TV plant, he said, as longer-term operational changes were not appropriate to salve a temporary exchange rate benefit.
Sony has developed its M-series line of electronics in Mexico by using cheaper components, and these are aimed at consumers who might not buy its high-end goods, providing a likely avenue for more cost savings.
Sony is enjoying a strong secular wave of growth in demand for digital TVs and related accessories, including Blu-ray high-definition video players, where it is the overwhelming US market leader, and Glasgow sees no letup.
"We are not seeing clear signs of softness," Glasgow said. "In the high end, it is hard to keep up with the full demand," he said of demand for its pricier flat-panel TV models.
The one category that has given Glasgow pause in recent months are digital camcorders, which he said are more sensitive to demand because they lack the must-have status that flat-panel TVs now have with many consumers.
"We saw some weakness in April, followed by a rebound in May and June," Glasgow said. "I don't know if it's a summer thing or not," he said of the apparent rebound in the past two months.
Sony does not break out forecasts for regional businesses for the upcoming year. But for the fiscal year ending on March 31, 2008, the electronics business reported a 2-percent decline in Japan, a 2-percent increase in the US market and an 11-percent jump in European sales, all in yen currency terms, according to its annual report.
Heading into the company's current fiscal year that started in April, Glasgow said that he had taken into consideration the impact of spiralling oil prices and the housing credit crunch in forecasting Sony's US growth.