Sony trims profit forecast as gaming performance drags

Japan’s Sony Group Corp (6758.T) on Friday trimmed its full-year profit forecast due to an expected weaker performance at its key gaming unit, which posted a steep drop in first-quarter operating profit as consumer interest in gaming waned.

Sony’s gaming business showed a 37 per cent fall in profit in the April to June quarter from a year ago, with Chief Financial Officer Hiroki Totoki pointing to a lack of high-profile titles while easing COVID-19 restrictions dampened stay-at-home demand.

The maker of PlayStation 5 consoles slashed the annual operating profit forecast for its gaming unit by 16 per cent, citing an expected fall in games sales from external developers while booking expenses from an earlier-than-expected closing of its deal for “Halo” creator Bungie.

Sony has said it aims to sell 18 million of its hit PS5 consoles this fiscal year as supply chain snarls ease and it ramps up production. It sold 11.5 million units in the year ended March.

The group sold 2.4 million PS5 units in the first quarter, only a slight increase from the same period a year earlier. Upcoming PlayStation titles it hopes will boost user engagement include “God of War Ragnarok”, due for release in November.

Sony cut its annual operating profit forecast by 4 per cent to 1.11 trillion yen ($8.37 billion). It posted a 9.6 per cent rise in first-quarter operating profit to 307 billion yen, beating analyst estimates, boosted by demand for its movies and television shows.

Last year, Sony booked a record 1.2 trillion yen profit, bolstered by demand for its entertainment content.

Sony shares closed flat ahead of earnings. The group’s shares have lost around a fifth of their value this year, compared with a 3 per cent drop in the blue-chip benchmark Nikkei 225 (.N225).