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Sony hikes net profit forecast as weak yen boosts business / Photo: © AFP
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Sony hikes net profit forecast as weak yen boosts business
Sony raised its annual net profit and sales forecasts on Tuesday, saying the weak yen had boosted its bottom line in sectors including gaming, music and movies.
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The Japanese conglomerate said it now expects net profit to March 2023 to reach 840 billion yen ($5.7 billion), up from 800 billion yen previously forecast.
It also slightly increased its sales outlook to 11.6 trillion yen.
The yen has lost more than 20 percent of its value this year, inflating profits for Japanese companies that operate overseas.
Sony said its massive global entertainment businesses, from music streaming services to blockbuster films and the PlayStation, were enjoying the impact of the cheap yen.
Sales were expected to be higher than forecast in several sectors but "partially offset by lower-than-expected sales in the financial services segment", the company said.
In the first half of the current financial year, net profit was 482.2 billion yen, up 13 percent on-year, while sales rose nine percent to five trillion yen.
Nearly two years since its launch, the company's PlayStation 5 console remains notoriously difficult to find.
But "hardware shipments are expected to grow significantly" in the second half, while software sales will be "very tough", said Hideki Yasuda, senior analyst at Toyo Securities.
"This year, software makers are postponing the sale of major titles, partly because production of the PS5 has been slow," Yasuda told AFP ahead of the earnings release.
With most of the forex-related boost coming from software sales, if the situation does not change it could start to have a negative impact on Sony's gaming earnings, the analyst warned.
"The PS5 is selling at a very high price, but it is well balanced cost-wise ... if the dollar strengthens, it's going to be tricky," he said.
Behind the yen's dramatic falls is the contrast between the monetary policies of the US and Japanese central banks.
While the US Federal Reserve is fighting inflation with aggressive rate hikes, the Bank of Japan has stuck to its longstanding monetary easing programme, designed to encourage sustainable growth.
I. Johansson--BTZ
