Sony Group Corp. lifted its full-year profit outlook after record PlayStation 5 console sales helped earnings beat estimates.
The Tokyo-based group raised its PS5 sales forecast to 19 million units for the fiscal year ending March, after selling 7.1 million units over the holiday quarter. Momentum for building out the PS5 ecosystem is growing, Chief Financial Officer Hiroki Totoki said on a call after the earnings Thursday, waving off concerns about a demand lull for the two-year-old console.
Sony also hiked its operating profit forecast to ¥1.18 trillion ($9.2 billion) from ¥1.16 trillion. The key games division, aided by the tailwind of favorable exchange rates, nudged expectations higher. Sony said it now sees slightly lower revenue for the year than previously.
“Given the current climate where demand is deteriorating around the world, it’s amazing that Sony’s earnings are in line with expectations,“ said Morningstar Investment Service analyst Kazunori Ito. “How long Sony can keep up this momentum depends on how much hardware they can deliver. If they can continue this virtuous software-hardware cycle, which was not possible until last year, this could be a turning point.”
The company, which supplies camera sensors used in Apple Inc.’s iPhones, said operating profit was ¥429 billion in October-December, above the average analyst expectation of ¥369 billion. Sales were ¥3.4 trillion.
Totoki, the veteran CFO who has led Sony’s earnings briefings for years, will oversee its global operations, taking up the positions of president and chief operating officer from April 1, the company said earlier.
“I will focus on strengthening our existing businesses and carry out the company’s medium-term plan,” the 58-year-old Totoki said. “I’m obsessed with growth. When growth slows at the company, you fall into a negative spiral.”
Chip supply issues that had bogged down PlayStation 5 console sales since its launch in 2020 have eased, the company said earlier this week. Improving supply of the console coincides with Sony’s release of God of War Ragnarok, the latest installment of the popular franchise.
Hardware inventories grew sixfold for Sony’s gaming group — from ¥75.3 billion to ¥513 billion — as well as its image sensor group, showing some signs of the global economic downturn.
“This rise could be partly explained by rising output of PS5s and potentially bloated unsold sales of PS4 consoles,” Amir Anvarzadeh of Asymmetric Advisors said, noting the weak yen has flattered Sony’s earnings through the past year. “This means that unless the yen weakens again, we have seen the last of these positive distortions.”
Sony lowered its sales outlook for the image sensor division, despite an improved product mix with a higher proportion of premium sensors. A sharp downturn in consumer demand, especially in China, has impacted mass-market devices, including Apple’s entry-level iPhones.
Investors are looking for signs of a rebound for the chip sector providing components for gadgets, and Sony’s Totoki pointed to the second half of the year for the beginnings of a recovery. South Korea’s Samsung Electronics Co. warned earlier this week that it expects the smartphone market to contract for the second year in a row.
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