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Sony Forecasts 44% slump In Profits After Record Sales During COVID-19

Sony who last year walked the head of their Australian consumer division out the door, at the peak of a boom in demand for home entertainment and gaming products has reported an 8% rise and a 4% slump in profits and is tipping a 44% decline during the next 12 months.

In Australia Sony has seen demand for their headphones and TVs with supply being the biggest drawback for the Company.

Late last year Abel Makhraz the Deputy General Manager at Sony Australia was with questions being asked about his relationship with Melbourne based distributor Directed Electronics whose contract with Sony is currently up for renewal.

Globally the Japanese conglomerate saw an 8% rise in revenue to US$89 billion for the year ending March 2022, with operating profit dropping 4% to 930 billion yen.

Sony’s outlook falls short of analysts’ expectations.

During the next 12 months Sony expects a 5% drop in annual operating profit to 325 billion yen in its gaming business which has witnessed supply problems during the past 12 months following the release of a new Playstation gaming console.

he company’s breadwinner gaming business enjoyed a massive boost from pandemic-fuelled demand last year, especially during the initial phases of the coronavirus outbreak as subscription-based services saw a surge in users.

Sony expects to maintain its current subscriber base this year and plans to increase sales of its next-generation gaming console, PlayStation 5. The company has so far sold 7.8 million units since its launch in November and aims to sell over 14.8 million units in fiscal 2021.

However, the electronics-to-entertainment giant predicts software sales will decline compared with last year’s record growth, as more people emerge from COVID-imposed hibernation. An increase in costs related to game software development will also weigh on profits.

The outlook for the current fiscal year pales in comparison to Sony’s record-breaking year through March, in which it posted a 15% jump in operating profit to 971 billion yen — the highest-ever for the company — while revenue rose 9% to 9 trillion yen.

Sony is forecasting that net profit will decline 44% to 660 billion yen.

(Photo: Sony)

Other factors that will put downward pressure on Sony’s profit include a rise in research and development cost related to its image sensor business, as well as a decline in sales related to the smash-hit anime movie “Demon Slayer,” which lifted profit last year.

“We anticipate continued constraints in chip supplies,” said Chief Financial Officer Hiroki Totoki at a news conference, adding that Sony has not been able to “keep up with the strong demand for PS5 hardware,” but promised to do its best in procuring parts to increase sales.

For its image sensor business, Sony expects sales to increase as shipments to customers, including China’s Huawei Technologies.

Totoki said the company has enough capacity to cover this year’s image sensor production but acknowledged concerns over a prolonged global chip crunch.

Sony plans to reveal further details on its mid-term business goals at its corporate strategy meeting scheduled next month.

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