Sony hikes net profit forecast as weak yen boosts gaming

TOKYO (AFP): Sony upgraded its annual net profit forecast on Thursday, saying it expects strong results in its key gaming sector as the weak yen inflates profits on products sold abroad.

The Japanese electronics and entertainment giant said net profit in the April-December period jumped five percent year-on-year to 809 billion yen ($6.3 billion).

This was partly thanks to strong sales in the game, music and imaging-and-sensors sectors in the third quarter, an important holiday shopping period, the company said.

In the 2022-23 financial year, Sony Group now expects net profits of 870 billion yen, up from the previous estimate of 840 billion yen.

Sony’s massive global entertainment business — from streaming services to blockbuster films and the PlayStation, as well as digital camera components — has benefited from the fall of the yen over the past year.

The Japanese currency has gained ground against the greenback in recent months but one dollar still buys around 128 yen, compared to around 114 yen one year ago.
Operating income in the gaming division “is expected to be higher than the November forecast mainly due to the positive impact of foreign exchange rates”, Sony said.

Sony sold 12.8 million PlayStation 5 units in the first nine months of the current financial year, already more than the 11.5 million sold in 2021-22, when production was hit by supply chain problems.

Game sales will 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,” Yasuda said.

The PS5 has some major titles in the pipeline, including the “highly anticipated” game “Final Fantasy XVI”, he added.

Sony’s gaming rival Microsoft has sparked an industry battle with its acquisition of “Call of Duty” maker Activision Blizzard — a huge $69 billion purchase that has yet to be finalised while it is examined by antitrust authorities.

A year ago, weeks after Microsoft unveiled its acquisition plan, Sony announced it would buy US game studio Bungie, creator of hits like “Halo” and “Destiny”.

Sony also announced a reshuffle at the top of the company, with chief financial officer Hiroki Totoki to become president and chief operating officer while remaining CFO.

Current company president Kenichiro Yoshida will become board chairman, and will remain chief executive officer.

Behind the yen’s fall is the contrast between the monetary policies of the US and Japanese central banks.

The Federal Reserve is hiking interest rates to fight inflation while the Bank of Japan is sticking to its longstanding monetary easing programme, designed to fuel sustainable growth.