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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