Sony shares plunge after a weak annual outlook
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The shares of Sony Group Corp have dropped by nearly 2% on Monday. The shares are dropping after the annual profit of the Japanese entertainment and electronics giant dropped below market expectations.
Sony shares drop amid a weak annual outlook
On Friday, Sony released its financial results for the financial year ending on March 2023. During the year, Sony saw record operating profits, driven largely by a robust performance in the company’s music and microchip units.
During the current business year, the company is projecting that the profits will decline by 3.2% to 1.17 trillion yen, equivalent to $8.55 billion. The profits reported during the period failed to meet the analysts’ average estimate of 1.275 trillion yen. The conglomerate is also anticipating a slow recovery in profitability for its video game unit.
Atul Goyal, an analyst at Jefferies, published a note to clients on Sony’s financial outlook. The note said that Sony’s financial position was “overly conservative.” The analyst also said that the increasing demand would likely benefit Sony’s PlayStation 5 (P5) game consoles and game software.
During the COVID pandemic, Sony’s video game business suffered a significant blow. At the time, the company failed to manufacture enough PS5 to meet demand because of issues with the supply chain. However, the company’s President, Hiroki Totoki, later said that the company was ready to deliver the consoles without making the customers wait for their orders to be fulfilled.
Sony sees record sales for PlayStation 5
Sony plans to boost the size of its video game business by promoting sales for PlayStation 5. The company plans to sell a record 25 million units for PS5 during the year up to March next year.
According to Sony, the company sold 19.1 million PlayStation 5 consoles during the financial year, which surpassed the company’s forecast of 18 million consoles. The number of consoles sold during the year also increased from the 11.56 million PS5 units sold during the previous financial year. At the time, Sony was facing issues with its supply chain.
The Japanese conglomerate also noted that its gaming sector was among the biggest profit drivers in 2023. The operating profit at the company for the gaming division was 250 billion yen. The figure was also a 27% year-on-year decline.
During the financial year, the gaming division at Sony generated a revenue of 3.64 trillion yen, which was a 33% year-on-year increase. The gaming business was the biggest category by sales reported by Sony.
Sony forecast an operating profit of 270 billion yen for its gaming business during the current financial year. The company also expects that the PlayStation VR 2 will help increase the company’s sales. According to the company, an increase in profitability from hardware would be seen next year.
Sony plans to sell 25 million PS5 gaming units during the current fiscal year. If Sony achieves this, it will be a record for the PS5. The company is also competing against the Switch console by Nintendo and Xbox by Microsoft.
