A strong performance from Sony’s smartphone line failed to stop the group from recording a loss for its fiscal second quarter.

The company sold 10 million smartphones during the period ending 30 September, 1.2 million more than the same period in 2012 and a 400,000 increase on the prior quarter. This puts the company on course to sell 42 million smartphones in the course the financial year, up from 33 million in 2012.

Sony’s Mobile Products and Communications unit, which also includes its PC operations, recorded sales and operating revenue for the period of JPY418.6 billion ($4.26 billion), up 39.3 per cent on the JPY300.4 billion recorded a year earlier.

As in Q1, the company attributed the revenue growth primarily to “a significant increase in unit sales of smartphones”, a rise in average selling prices and foreign exchange movements.

However, the business reported an operating loss of JPY900 million, compared with a JPY23.1 billion loss in the equivalent period in 2012.

The loss was narrowed due to the increase in smartphone sales, but the unit is still hampered by poor PC sales, which decreased 25 per cent year on year to 1.5 million units.

During the quarter, Sony unveiled its flagship Xperia Z1 smartphone (pictured), featuring a 20.7MP camera and advanced imaging technology. Sony president and CEO Kazuo Hirai said the Z1 “is truly a watershed moment in Sony’s history”.

Looking forward to the rest of the fiscal year, Sony expects sales in its Mobile Products and Communications unit to be slightly below what was forecast in August, largely due to a downward revision in unit sales of PCs.

However, year-on-year sales are expected to increase significantly with the division recording an operating profit — again due to an increase in unit sales of smartphones.

Sony as a whole reported a net loss attributable to shareholders of JPY19.3 billion, a 24.5 per cent increase on the JPY15.5 billion loss reported in Q2 2012.

The loss came despite a 10.6 per cent year-on-year increase in sales and operating revenue which hit JPY1.78 trillion and was largely attributed to smartphone sales and the favourable impact of foreign exchange rates.