Sony Surpasses Second Quarter Profits By 1% As PS5 Costs Squeeze Margins
- 6% increase in operating profit forecast for the year to Y1 trln
- Second quarter operating income Y318.5 billion vs. Y315.2 billion a year earlier
- Sales growth in the games business offset by lower profitability
- Sony has sold 13.4 million PS5 units
TOKYO, Oct.28 (Reuters) – Japan’s Sony Group Corp (6758.T) posted a surprise 1% increase in operating profit for its second quarter on Thursday, although costs related to sales growth of its PlayStation 5 (PS5) console weighed on the margins.
Lower profitability in the key gaming segment also could not prevent the group from raising its full-year operating forecast by 6% to 1,000 billion yen ($ 8.81 billion) from its August forecast, driven by expected earnings growth in areas such as films, music and electronics.
Sony said it has sold a total of 13.4 million PS5 units since its launch last November. This contributed to a 27% increase in year-over-year sales of its gaming unit, although profit was less robust as the conglomerate sold hardware below cost.
Manufacturers of game consoles frequently sell new devices below the cost of manufacturing because they provide an installation base for selling software. Sony said sales of proprietary titles have fallen, although sales from other developers have increased.
Sony aims to sell 14.8 million PS5 consoles this fiscal year – a target that takes into account the global semiconductor shortage.
Sony announced group profit of 318.5 billion yen for July-September. This compares to the 222 billion yen average of six analyst estimates compiled by Refinitiv.
The conglomerate – covering areas such as entertainment, sensors and financial services – switched to IFRS accounting standards from US GAAP in the current fiscal year.
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($ 1 = 113.5,300 yen)
Reporting by Sam Nussey; Editing by Christopher Cushing
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