PS5 maker raises full-year profit outlook after record second quarter
Sony Corp raised its
full-year outlook on Wednesday after posting strong second-quarter results.
The quarter was record
profitable due to strong demand for the next-generation PlayStation 5 (PS5)
which will be launched next month. The release of the Japanese animated film “Demon
Slayer”, co-distributed by the company’s music unit, also contributed to profits
made in the second quarter. Since the film’s release on October 16 box-office
records in Japan have shattered.
Revenue generated from gaming
and entertainment divisions and other alternative divisions helped cushion the
volatility in hardware sales, according to Sony’s CEO, Kenichiro Yoshida.
Ahead of its PS5 launch,
Sony is targeting sales of 7.6 million units of the gaming console, or more
from its launch through March 2021, according to CFO Hiroki Totoki at a
briefing, citing the sales of PS4 after its launch seven years ago. Although
the PS4 is gradually coming to the end of its lifecycle, increased consumer downloads
of the gaming software and online subscriptions during the Covid-19 lockdown
boosted profits in the second quarter.
In its pre-sales, Sony
sold as much PS5 in the first 12 hours in the U.S. as in the first 12 weeks for
the PS4 gaming console, according to Jim Ryan, CEO of Sony Interactive
Entertainment, in an interview.
“The demand as expressed
by the level of pre-order has been very, very considerable,” he said.
Totoki alerted the public
of major damage on its image sensor business, Huawei Technologies Co Ltd,
which was under pressure from the U.S., banning global suppliers from using its
chip.
Before the ban Hauwei
Technologies was Sony’s second-largest image sensor customer, with Apple Inc.
as the first-largest customer. The Chinese smartphone maker accounted for
almost 20% of Sony’s $10 billion image sensor revenue, according to analyst
estimates. The image sensor division may not achieve full-recovery in
profitability until March 2023 despite the company’s effort to diversify its
business and customers.
“It will take
considerable time until other customers adopt the trend of high-performance,
large-sized sensor led by the Chinese customer,” said Totoki.
After reporting strong
results in the second quarter, ending September Sony raised its full-year
outlook to 700 billion yen ($6.7 billion), up 13%. The outlook beats the 672.33
billion yen consensus of analysts, as compiled by Refinitv.
Sony also forecasts that its
gaming division will post a full-year profit of 300 billion yen, up from the
previous estimate of 240 billion yen. For its image sensor division, Sony cut
the outlook to 81 billion yen, down 38%, and further cut its three-year
investment by 40 billion yen to 650 billion yen, as reported by Reuters. It warned
that production may slow down at the new plant in Nagasaki, southern Japan.
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