June 5, 2023

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Sony shares are faltering amid weaker-than-expected annual forecasts

TOKYO (Reuters) – Shares of Sony Group (6758.T) fell as much as 4.8 percent on Monday after the Japanese electronics and entertainment group’s annual profit forecast missed market expectations.

The company on Friday reported record operating profit for the year ending March 2023, driven by strong performance in its music and microchip units.

But for the current business year, it expected a profit drop of 3.2% to 1.17 trillion yen ($8.55 billion), missing analysts’ average estimate of 1.275 trillion yen in profit, as it expects a slow recovery in profitability in the video game unit.

Jefferies analyst Atul Goyal said in a note to clients that Sony’s outlook is “very conservative” and that its PlayStation 5 (PS5) game consoles and game software are likely to benefit from pent-up demand.

Sony has struggled to produce enough PS5s to meet demand during the COVID-19 pandemic due to supply chain crises, but President Hiroki Totoki said on Friday that the company is now ready to offer consoles without keeping customers waiting.

The conglomerate aims to sell 25 million units of PS5 in the year ending next March, which is a record.

($1 = 136.9000 yen)

(Reporting by Kiyoshi Takenaka) Editing by Uttarish Venkateshwaran

Our standards: Thomson Reuters Trust Principles.

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