Tokyo (AFP) – Japan’s Sony on Wednesday reported a record annual net profit but issued a cautious forecast, saying it hopes to “manage the impact” of US trade tariffs on its business. The entertainment and electronics giant said takings had been strong in the gaming, music, and image sensor sectors in the year to the end of March 2025.
But US President Donald Trump’s sweeping trade levies have made the business environment less predictable, including for global conglomerates such as Sony Group. “We currently expect to be able to manage the impact on the profitability to approximately 100 billion yen ($680 million), or less than 10 percent of the operating income forecast,” the company said.
The firm’s PlayStation 5 console production was “not in a tight spot” despite the tariffs, but Sony was monitoring Trump’s plan for a 100 percent tariff on films produced outside the United States, said president and chief executive officer Hiroki Totoki. “Movies are shot at various locations depending on their storylines. That’s the general practice,” he told a news conference. “Decisions to work outside the United States are made because of the soaring cost of Hollywood.”
Sony logged a record net profit of 1.14 trillion yen ($7.7 billion) for the 2024-25 financial year but said it expected that to fall 13 percent to 930 billion yen in the current financial year. The forecast does not include its financial services sector, which the firm said it will partially spin off in the next 12 months. Sony said Wednesday the decision to spin off would allow it to “focus on a business portfolio centred around creation” — in particular its entertainment ventures and image sensors, which are used in smartphone cameras.
– PS5 price hikes – The company had hiked its annual forecasts in February, following robust sales of games, music, and other products in the year-end holiday shopping season. The yen’s relative weakness has also boosted the value of many of the conglomerate’s exports. Music streaming is a money-spinner for Sony, which has an impressive back catalogue and a roster that includes superstars such as Beyonce.
In mid-April, Sony announced price increases for several models of its PlayStation 5 gaming console in markets including Europe but notably excluding the United States. PS5 consoles are primarily assembled in China, which on Wednesday agreed with the United States to drastically lower sky-high tariffs in their brutal trade war. Sony has so far not touched the cost of the higher-priced, higher-spec PS5 Pro console, which hit shelves in November.
Overall, “regarding the rise in US tariffs, (Sony) will likely be able to deal with it for the time being as it has stockpiled inventory in the United States,” Rakuten Securities chief analyst Yasuo Imanaka said last month. “But if high tariffs continue, the longer-term impact is unclear,” he warned. Masahiro Wakasugi of Bloomberg Intelligence also said ahead of Wednesday’s earnings that “tariffs are likely to be a headwind next year” for Sony. But “the music and picture division’s earnings can also expand strongly thanks to the high popularity of its streaming music and movies.”
Sony’s shares rose 3.67 percent to 3,788 yen in Tokyo.
© 2024 AFP
