Sony Group has issued a cautious outlook for the upcoming fiscal year, citing the impact of US tariffs that have significantly dampened expectations for growth in operating profit.
On Wednesday, the entertainment company projected a ¥100 billion ($700 million or approximately Rs. 5,975 crore) negative effect from US tariffs for the fiscal year ending in March. Sony anticipates an operating profit of ¥1.28 trillion (around Rs. 74,353 crore), which falls short of the average analyst forecast of ¥1.5 trillion (roughly Rs. 87,126 crore) and indicates flat growth compared to the fiscal year ending March 2025.
This outlook coincided with Sony announcing a share buyback plan worth up to ¥250 billion (circa Rs. 14,521 crore) and detailing the timeline for a partial spinoff of its financial services division. The company intends to list this financial unit on September 29 and will classify it as a discontinued operation in its financial statements starting this quarter.
Following the announcement, Sony’s shares rose by as much as 4.5 percent. There has been a notable increase in share buybacks in Japan, as companies that have held substantial cash reserves are now facing mounting pressure to enhance capital efficiency and increase returns to shareholders.
In its latest quarterly results, Sony reported an operating income of JPY 203.7 billion (approximately Rs. 11,836 crore), exceeding expectations. The company sold 18.5 million PlayStation 5 consoles in the fiscal year ending in March, a decrease from the 20.8 million units sold in the previous year.
As Sony’s new Chief Executive Officer Hiroki Totoki takes the helm, his immediate challenge will be steering the entertainment giant through a landscape influenced by US tariffs. The US market is critically important for PlayStation 5 sales, with the majority of production occurring in China. Recently, Sony increased the console’s price in European, Australian, and New Zealand markets, raising questions about potential price adjustments in the US if tariffs persist.
Any price hikes could undermine the momentum of the five-year-old console, particularly with competition from the upcoming Nintendo Switch 2 set to launch in June. Additionally, the postponement of the highly anticipated Grand Theft Auto VI by Rockstar Games casts a shadow on PlayStation sales for the current fiscal period.
“The delay in GTA VI is a significant blow to the PS5,” remarked David Cole, CEO of DFC Intelligence, a US-based digital entertainment research firm. “This title was expected to encourage many players to transition from the PS4 to the PS5.”
Sony’s various business segments face challenges as well. The forecast for image sensors, crucial for smartphones produced by major brands like Apple and Xiaomi, remains uncertain, especially with tariffs impacting handsets in the US. Furthermore, ex-President Donald Trump has alluded to potential tariffs on films produced outside the US, complicating the situation for Sony as it promotes Japanese animated films like the Demon Slayer series internationally.
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