Sat, Apr 27, 2019 - Page 10 News List

Sony annual income hits new high for second year

DOWNTURN AHEAD:The Japanese giant’s profits are forecast to decline 45% this fiscal year as PlayStation sales slow and given a high comparison base last year


Visitors stand inside Sony Corp’s headquarters in Tokyo, Japan, on April 9.

Photo: Bloomberg

Japan’s Sony Corp yesterday said that robust games and entertainment divisions had pushed annual profit to a second consecutive record high, but warned of a looming downturn in its bottom line.

The PlayStation manufacturer also said the integration of EMI Music Publishing as a fully-owned subsidiary had played well.

Net profit rose 86.7 percent to ¥916.3 billion (US$8.2 billion) in the year that ended on March 31, while operating profit climbed 21.7 percent to ¥894.2 billion.

Sales edged up 1.4 percent to ¥8.7 trillion.

However, the future is looking less bright as this year’s one-off boost partly from integrating EMI would make annual comparisons less rosy, the company said.

Net profit for the current fiscal year ending in March 2020 are forecast to drop 45 percent to ¥500 billion, with operating profit sagging 9 percent to ¥810 billion, company data showed.

However, sales are expected to grow 1.5 percent to ¥8.8 trillion.

“Sony had achieved a V-shape recovery until the last fiscal year, but its growth is expected to slow down in the current fiscal year,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

“PS4, which spearheaded Sony’s revival, is now peaking out, while its mobile phone businesses are expected to continue squeezing profits,” he said.

Sony continued to struggle in the mobile business with its operating loss more than tripling to ¥97 billion because of reduced smartphone sales.

Profits also fell in Sony’s semiconductor and financial services businesses.

However, it enjoyed strong growth in its games and network businesses, including an online service that allows users to enjoy music and video titles via their PlayStation accounts.

Operating profit in that sector soared 75 percent to ¥311 billion.

Revenue from PlayStation4 consoles fell, but software sales and network services logged robust rises.

Sony said it expects revenue from this core sector would sag due to a continued fall in game hardware sales, costs to develop the next-generation console and unfavorable foreign exchange rates.

Yasuo Imanaka, an analyst at Rakuten Securities in Tokyo, said Sony’s game business also faces a threat from new entrants in the sector.

“Google’s Stadia can be a powerful rival. Sony is expected to launch PS5 in the near future, but may have to review its game business strategy due to the emergence of Stadia,” he said.

The Stadia platform would let gamers stream blockbuster titles to any device they wish.

Separately, Japanese games giant Nintendo Co yesterday said it was working with Chinese Internet firm Tencent Holdings Ltd (騰訊) to roll out its popular Switch console in China, confirming rumors that have dramatically pushed up its share price.

“Nintendo ... is announcing that a collaboration is in progress with Tencent Holdings Limited ... to release the Nintendo Switch video game system in China,” the firm said in a brief statement.

The Switch has become a huge global seller, helped by the release of innovative, family-friendly titles that have wowed critics and gamers alike.

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