Business / Corporate

Sony estimates operating profit may fall 30% for fiscal year

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Sony Corp. warned that its operating profit could fall 30 percent or more in the current fiscal year because of the impact of the coronavirus pandemic on consumer sentiment and global supply chains.

The company sounded the note of caution as it reported operating profit of ¥35.45 billion ($331 million) for the quarter ended in March, down 57 percent from the same period a year earlier. Revenue also fell to ¥1.75 trillion. Sony declined to provide a full forecast for the current fiscal year for the first time since 2016 after the Kumamoto earthquake disrupted its operations.

Chief Executive Officer Kenichiro Yoshida has overhauled the technology icon in recent years to focus on franchises such as sensors for smartphone cameras and the PlayStation games business, yet many of its operations remain vulnerable to people getting stuck at home. Consumers can’t go out to buy phones or electronics, or watch Sony movies, while factories that make its products are struggling to return to full capacity.

“Consolidated operating income for the fiscal year ending March 31, 2021 is currently estimated to be at least 30 percent lower than the level achieved in the previous fiscal year,” the company said in a presentation, based on its best assumptions at the moment.

“COVID-19 may have a lasting impact on markets like Brazil, India and Southeast Asia because it could decrease demand for consumer electronics, movie theaters and music concerts,” said Bloomberg Intelligence analyst Masahiro Wakasugi.

Sony has benefited in recent years from its investments in making image sensors, which are incorporated into many of the world’s leading smartphones, including Apple Inc.’s iPhones. The industry was expecting a boom this year with the launch of the next-generation wireless technology called 5G, but shipments fell in the first three months by the fastest rate on record because of constraints on supply and demand.

Sony said production of the PlayStation 4 console has been hit by the COVID-19 pandemic to some extent, but the output is sufficient to cover the current demand for the console and sales are stable. Meanwhile, the PlayStation 5 remains on track for a release at the end of this year. Software for the new console is also on schedule, the company said, as it hasn’t seen any major impact on games development.

Sony said the virus hasn’t had a large impact on its image sensor operations. Its consumer electronics unit, however, has been hit, with impact on television factories in Malaysia, Mexico and Slovakia. The plants have resumed partial operation. Sales of televisions have been deteriorating, especially in Europe, India and Vietnam. Demand for digital cameras has also decreased.

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