ALBAWABA — Sony Group Corp. on Thursday cut its revenue forecast for its fiscal year ending in March, but raised its net-profit projection and increased its operating-profit forecast for its key gaming business as the weak yen inflates profits on products sold abroad.
"Given the current climate where demand is deteriorating around the world, it’s amazing that Sony’s earnings are in line with expectations," Morningstar Investment Service analyst Kazunori Ito, told Bloomberg.
"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," Ito added.
The Japanese electronics and entertainment giant said it expects full year revenue to increase 16 percent to 11.5 trillion yen, compared with its previous forecast of a 17 percent rise and net profit to drop 1.4 percent to 870 billion yen, instead of its previous forecast of a 4.8 percent decrease.
Net profit for the third quarter ended Dec. 31 fell 6 percent to 326.81 billion yen from 346.16 billion a year earlier, while revenue increased 13 percent from a year earlier to 3.413 trillion yen, the company said.
The Tokyo-based company raised it operating profit forecast to 1.18 trillion yen from 1.16 trillion yen for the fiscal year ending March, noting that operating profit was 429 billion yen the third quarter, above the average analyst expectation of 369 billion yen, on sales of 3.4 trillion yen.
Operating profit from all segments increased, led by gains in the company's game, imaging and sensing along with its financial businesses, except for its pictures division which fell to 25.445 billion yen from 149.37 billion yen during the same period a year earlier, when blockbuster movies like "Spider-Man: No Way Home" and "Venom: Let There Be Carnage" inflated earnings.
Full year outlook and forecast look rosy, in part due to its gaming division.
Gaming sales also have an important bearing on financial results, Hideki Yasuda of Toyo Securities told AFP.
"Sony is expected to aim for higher hardware sales in the coming fiscal year. What is key is whether software sales will also increase to keep up with higher hardware sales," added Yasuda.
The PS5 has some major titles in the pipeline, including the "highly anticipated" game "Final Fantasy XVI", he noted.
The yen's fall was helped by the contrast between the monetary policies of the United States Federal Reserve and the Bank of Japan, with the Fed hiking interest rates to fight inflation, while the Bank of Japan is sticking to its longstanding monetary easing program, designed to fuel sustainable growth.
"Sony has a wide range of businesses, so the impact of foreign exchange changes are unevenly felt in various areas," Yasuda said.
Meanwhile, Sony Group board reported in a regulatory filing that it had unanimously approved a boardroom reshuffle meant to strengthen its management structure.
As of April 1, Yoshida Kenichiro will retain his current roles as the company’s chairman and chief executive officer but will relinquish the title of president to Totoki Hiroki.
Totoki, currently chief financial officer, is to become president, remains as CFO and gets an additional new role as chief operating officer, overseeing ongoing business operations within the company.
