Japanese electronics and entertainment corporation Sony revealed yesterday that it expects its annual loss to exceed $2 billion (£1.22bn) this year, cancelling shareholder dividends for the first time in more than half a century.

Citing intense competition, especially from Chinese rivals, Sony said that it anticipates a net loss of $2.15 billion (£1.32bn) for the fiscal year to March 2015.

Its previous forecast was for a $466 million (£285m) net loss.

For the first time since going public in 1958, the conglomerate cancelled both half and full-year dividend payments.

“This is the very first time we ever eliminated a dividend. For more than 50 years we always paid a dividend. The entire management takes this very seriously,” said company president Kazuo Hirai.

The company plans to cut staff in its mobile communications business by about 15 per cent — roughly 1,000 people.

Sony has been trying to reshape its business after years of losses and has repeatedly promised turnarounds without delivering.

It said that the loss for the current fiscal year stems from a lower valuation of its mobile phone business due to weaker than expected sales.

The company is recording an “impairment charge” of $1.7bn (£1.04bn) in the July-September quarter.

The charge is purely an adjustment to the company’s balance sheet, involving no cash, but it illustrates that the mobile business is far less valuable and will generate lower profits than previously thought.

The smartphone business has proven particularly tough for Sony.

Apple and Samsung dominate at the top end while Chinese and other Asian manufacturers are hogging the market for cheaper phones that are most likely to appeal in fast-growing developing countries.

Mr Hirai said that Sony had not managed to stay ahead of sea changes in the industry.

“The Chinese smartphone manufacturers have made great strides and are expanding outside their own market and this has caused a shift in the pricing,” he added.

“Meanwhile, Apple and other manufacturers are launching strong, innovative products. The changes are very rapid and dramatic.”

The company reported a $1.19bn (£730m) loss in the fiscal year that ended in March.