Sony reported what it deemed a significant decrease in sales in its Mobile Communications unit, following smartphone sales weakness in Japan, Europe and Latin America in the final three months of 2018.

During the period, the company’s fiscal Q3, it shipped 1.8 million smartphones compared with 4 million in the comparable fiscal 2017 quarter.

Sales of JPY137.2 billion ($1.3 billion) were down 37 per cent year-on-year and the company reported an operating loss of JPY15.5 billion for the business compared with a prior-year JPY15.8 billion profit.

Sony revised its forecast for the full year downward by JPY20 billion (4 per cent) from guidance issued in October 2018 on the back of the sales weakness. Its operating loss forecast remained unchanged, however, as the impact of the sales slowdown was offset by reduced operating costs.

The October forecast already marked a downgrade from its initial expectations.

Full year smartphone volumes are now expected to be 6.5 million units, down from earlier guidence of 7 million and compared with 13.5 million in fiscal 2017.

Sony has been slimming down its mobile business as it focuses on profitability for some time now, although there will come a point where its lack of scale impacts its viability on an ongoing basis. A plan to halve operating costs in the unit by the year to 31 March 2021 is “progressing according to plan”.

On a group level sales decreased 10 per cent to JPY2.4 trillion (attributed largely to its Financial Services unit), while operating income increased 7 per cent to JPY377 billion, aided by a gain from the consolidation of EMI Music Publishing.

Net income increased 45 per cent to JPY429 billion due to a tax gain related to deferred tax assets in the US. The company said adjusted net income, excluding the various extraordinary items, would have decreased.