Sony hikes net profit forecasts as weak yen boosts gaming

by Katie Forster / Hiroshi HIYAMA
Agence France-Presse

Tokyo, Japan (AFP) — Sony upgraded its annual net profit forecasts 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 (AFP)

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.

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.

The Japanese currency has gained ground against the greenback in recent months but the dollar still buys around 128 yen, compared with around 114 yen a year ago.

Sony sold 12.8 million PlayStation 5 units in the first nine months of the current financial year, with 7.1 million of those shifted in October-December.

This year’s figure is already more than the 11.5 million sold in 2021-22, when supply chain problems slowed production of the next-generation console.

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 noted.

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 said 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 on Thursday, 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.

The yen’s fall was helped by 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.

“Sony has a wide range of businesses, so the impact of foreign exchange changes are unevenly felt in various areas,” Yasuda said.

The company said sales in its pictures division were expected to be lower than previously forecast, partly because of “the impact of foreign exchange rates” which make it more expensive to produce films abroad.