Sony targets bumper PS5 sales as annual profits hit record

Sony is hoping that sales of its PlayStation 5 game console will surpass those of its hugely popular predecessor this year, despite warnings that the global chip crisis will likely persist for the next 12 months.

The Japanese group’s goal for the new console came as the pandemic-triggered gaming boom took its annual profits to an all-time high, even as the trade dispute between the United States and China had severely affected its gaming business. image sensors.

Sony also announced on Wednesday that it would repurchase up to 200 billion yen ($ 1.8 billion) of its own stock, which is trading near a 20-year high.

Since its launch in November, Sony has sold 7.8 million PS5 consoles, slightly more than the PS4 units sold in the same period after the latter system’s release in 2013. For the new fiscal year, which ends In March 2022, the company said it would aim to sell more PS5s than the 14.8 million PS4s sold in the second year after launch.

“It is still true that supplies have not been able to meet the very high demand for PS5,” Hiroki Totoki, Sony’s chief financial officer, said Wednesday. “We expect the semiconductor-focused supply constraints for devices to continue into this fiscal year.

But after a successful year, Sony is bracing for lower profits in many of its core businesses, including games, music and image sensors.

For the 12 months to March 2022, the group expects its net profit to drop 44% to 660 billion yen due to higher tax charges. This was lower than analysts’ forecast of 743 billion yen, according to S&P Global Market Intelligence. Revenue is expected to increase 8% to 9.7 billion yen.

In the January-March quarter, signs of a slowdown were seen in the games division, as digital software sales fell 3.7% from a year earlier, despite strong demand for PS5 hardware.

“There is no doubt that there is a very strong demand for PS5 hardware, but it is not yet clear whether the demand for software will hold up,” said Hideki Yasuda, game analyst at Ace Research Institute.

Sony expects operating profits from its games business to fall 5% to 325 billion yen this year, but Yasuda says the drop is smaller than expected. He pointed to the drop in freight costs as the company ships more consoles by sea rather than the more expensive air freight.

Beyond games, operating profits for its image sensors division fell 41% in the first three months of 2020 after sales of its CMOS sensors to Huawei, its second customer after Apple, were hit by US sanctions against the Chinese telecommunications group.

Totoki said the company expects to recoup the lost volume caused by the blow to Huawei from other customers in the current fiscal year, while profits are expected to pick up during the year onwards. ‘April 2022.

For the January-March quarter, Sony said its net profit increased 8.5-fold to 107 billion yen from a year earlier, while revenue rose 27 percent to 2.2 billion yen.

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