Sony upgrades full-year net profit and sales forecast

Sony Group Corp. upgraded its full-year sales and profit forecast on Thursday, saying it expected strong performances in the music, movie and electronics sectors.

The optimistic outlook came despite a lackluster second quarter overall, with net profit down more than half compared to its extraordinary results in the same period last year.

The conglomerate, which this year acquired top online anime library Crunchyroll for $1.2 billion, said it expected the purchase to boost sales and profit in its key movie division.

Several factors including “license revenue in the anime business” are also projected to lift music sales, as Sony enjoys steady growth in its entertainment businesses.

The firm is now projecting a net profit of ¥730 billion ($6.4 billion) for this fiscal year, up from its earlier estimate of ¥700 billion.

It also raised its annual sales forecast from ¥9.7 trillion to ¥9.9 trillion.

“Sony is displaying a strong performance in its mainstream electronics sector,” Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, said.

“Its music sector is seen to remain solid while movie-related businesses are expected to recover firmly. These strong sectors offset declines in its gaming business,” Yasuda said.

The group’s net profit more than halved for the second quarter to ¥213.1 billion — facing a slowdown in the pandemic boom enjoyed by the gaming sector as people turned to indoor entertainment during virus lockdowns.

A one-time tax reduction had also contributed to strong net profit results in the same quarter last year.

Last fiscal year, Sony reported its biggest-ever annual net profit, which more than doubled to ¥1.17 trillion on record sales of nearly ¥9 trillion.

“The gaming industry had an extraordinary year last year,” said Yasuo Imanaka, chief analyst at Rakuten Securities.

“Sony is now experiencing a reactionary fall,” Imanaka said before the earnings release.

The positive impact of a box-office triumph for the anime epic “Demon Slayer”, distributed by Sony’s animation unit Aniplex, “is lasting longer than expected”, Imanaka said.

In December, “Demon Slayer”, in which a teenager hunts down and beheads demons, became Japan’s top-grossing film of all time.

The title also had the best opening ever recorded in North America for a foreign-language film.

Sony is also hoping cinema ticket sales will pick up as COVID-19 restrictions ease worldwide, with a number of potential blockbusters lined up for the end of the year including “Ghostbusters: Afterlife” and “Spider-Man: No Way Home”.

“As long as they don’t over-saturate the market, then they have a very steady potential income stream from the Spider-Man franchise,” Mio Kato, an analyst at LightStream Research in Tokyo, said.

Sony owns a lot of gaming franchises that can “translate well to feature film,” she added.

“That sort of cross selling is something that Japanese companies have started to really figure out over the last two or three years, so it’s just a matter of timing.”

Sony is negotiating its involvement in a plan by Taiwan’s microchip giant TSMC to build its first factory in Japan, Chief Financial Officer Hiroko Totoki told reporters.

“A stable supply of semiconductors is good for the whole of Japanv… once a decision is made, we want to make an announcement without any delay.”

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