Sony Cuts Profit Outlook on Lower PlayStation Prospects

Sony Group Corp. downgraded its profit outlook for the fiscal year, with its PlayStation division expected to contribute less than previously forecast.

The Tokyo-based entertainment conglomerate said on Friday that it now expects 1.11 trillion yen ($8.3 billion) in operating profit, down from 1.16 trillion yen previously. The gaming and network services group, which houses the PlayStation business, accounted for the full revision, going down from 305 billion yen to 255 billion yen. Sony cited costs related to its acquisition of Bungie Inc. and lower expectations for third-party software sales on the platform as reason for the change.

The company’s April-June operating profit beat estimates, coming in at 307 billion yen, higher than the average analyst estimate of 286.7 billion. Investors will be looking for signs that Sony can weather the current macroeconomic challenges by relying on the rest of its portfolio beyond the keystone PlayStation business.

The outlook downgrade comes after Sony’s hardware production was limited by chronic supply chain bottlenecks exacerbated by extended Covid-19 lockdowns in China. The company sold 2.4 million PlayStation 5 units in the period, slightly better than the 2.3 million from a year ago.

Supply chain snarls will likely continue to trouble electronics makers this year as the re-emergence of Covid infections and Russia’s invasion of Ukraine affect shipping, production capacity and the cost of materials. South Korean giant Samsung Electronics Co. said a day earlier that it’s adjusting its forecast on an almost daily basis because of the high degree of geopolitical volatility and economic uncertainty. Component makers, logistics specialists and manufacturing machinery providers have expressed skepticism that the supply chain can return to normal operation this year.

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(Updates with more details from announcement)

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