Sony reports record net profit but issues cautious forecast

TOKYO: Sony announced its biggest-ever annual net profit on Wednesday, driven by unprecedented pandemic-fuelled demand as people around the world turned to gaming to liven up lockdowns.

But with hope on the horizon for an end to the pandemic as vaccines roll out in many parts of the world, the Japanese firm issued a more cautious forecast for the year ahead.

Although the coronavirus has hit many industries hard, the gaming sector has been one of the few to experience an unprecedented boom.

The Tokyo-based entertainment and consumer electronics giant said annual net profit jumped to 1.17 trillion yen ($10.7 billion) — more than doubling from the previous year on sales of 8.99 trillion yen, also a record high.

But for the fiscal year that began in April, they forecast net profit of a more modest 660 billion yen, on sales of 9.7 trillion yen, with the gaming sector anticipating an eventual tapering of the soaring demand linked to the pandemic.

This financial year also saw the launch in November of Sony’s much-anticipated PlayStation 5 console, which set off a head-to-head battle for holiday sales with the new Xbox from Microsoft.

Demand for the PS5 has been strong, though pandemic-related supply problems have left many would-be customers empty-handed and created chaotic scenes at electronics stores when supplies do become available.

It hasn’t all been smooth sailing on the software side either, with Sony opting to pull the much-hyped Cyberpunk 2077 game from PlayStation stores in December after a flood of complaints over bugs and compatibility issues.

“It’s too early to evaluate the success of PS5,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

“Demand for PS5 consoles remains strong but sales of its software have yet to show a promising performance,” he said, speaking before Sony released its results.

“We are focusing on whether Sony can release powerful titles and show results,” he said, adding that the current fiscal year is seen as “a crucial period” for the PS5.

Sony sold 7.8 million PS5 units over the past fiscal year and hopes to sell more than 14.8 million units this year — aiming for the console to do better than the second year of its predecessor, the PlayStation 4.