Sony hopes sales of its PlayStation 5 games console will outpace those of its hugely popular predecessor system this year, despite warning that the global chip crunch is likely to persist for the next 12 months.
The Japanese group’s target for the new console came as the pandemic-driven gaming boom lifted its annual profits to a record, even as the US-China trade dispute caused a heavy hit to its image sensor business.
On Wednesday, Sony also said it would buy back up to ¥200bn ($1.8bn) of its own shares, which are trading near a 20-year high.
Since its November launch, Sony has sold 7.8m PS5 consoles, slightly more than the PS4 units sold during the same period following the latter system’s release in 2013. For the new financial year, which ends in March 2022, the company said it would aim to sell more PS5s than the 14.8m PS4s sold during the second year following its launch.
“It continues to be the case that supplies have not been able to keep up with the very strong demand for PS5,” Hiroki Totoki, Sony’s chief financial officer, said at an online briefing on Wednesday. “We expect semiconductor-focused supply constraints for devices to continue into this current fiscal year.”
But following a blockbuster year, Sony is bracing for weaker profits in many of its mainstay businesses including games, music and image sensors.
For the 12 months to March 2022, the group expects its net profit to fall 44 per cent to ¥660bn due to rising tax expenses. That came in below analysts’ forecasts of ¥743bn, according to S&P Global Market Intelligence. Revenue is expected to rise 8 per cent to ¥9.7tn.
During the January to March quarter, there were some signs of a slowdown in the gaming division with digital sales of software falling 3.7 per cent from a year earlier, despite robust demand for PS5 hardware.
“There is no doubt that there is very strong demand for PS5 hardware, but it is not clear yet whether software demand is keeping up,” said Hideki Yasuda, a gaming analyst at Ace Research Institute.
Sony expects operating profits for its gaming business to fall 5 per cent to ¥325bn this year but Yasuda says the decline is smaller than expected. He pointed to lower freight costs as the company ships more consoles by sea rather than by pricier air freight.
Beyond games, operating profits in its image sensor division fell 41 per cent during the first three months of 2020 after sales of its CMOS sensors to Huawei, its second-biggest customer after Apple, were hit by US sanctions against the Chinese telecoms group.
Totoki said the company expected to recoup lost volume caused by the hit to Huawei from other customers during the current fiscal year, while profits are expected to recover in the year from April 2022.
For the January to March quarter, Sony said its net profit increased 8.5-fold to ¥107bn from a year earlier, while revenue increased 27 per cent to ¥2.2tn.