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Sony Prepares for Lowest Profit

Sony Corp expects operating profit to drop at least 30% this financial year to its lowest in four years. The company anticipates a hit in demand for its TVs, cameras and smartphone image sensors from the coronavirus outbreak.

Sony has halted production at some plants and experienced supply-chain disruptions. Governments around the globe have imposed restrictions on movement and business activity to contain the virus.

Chief Financial Officer Hiroki Totoki said the consumer electronics business such as TVs has been hardest hit right now. But the impact will expand to other businesses as well.

Stocks are making the biggest moves in the premarket. The electronics and entertainment company reported a 57% fall in operating profit for the January-March quarter to 35.45B yen. It was missing a 73.77 billion yen average of analyst estimates.

The company did not provide precise forecasts for the current year which started in April. But Totoki said current calculations showed that profit would drop. It was likely to drop “at least about 30%” from 845.46 billion yen in the previous year.

The forecast profit of less than 600 billion yen would be lowest since the year that ended in March 2017. It was when earthquakes knocked out factories in southern Japan that produce image sensors.

Sony’s Gaming Business Looks Bright

Totoki said profitability at its image sensors business, a key growth driver, could deteriorate. This is as the coronavirus outbreak could cause a shift away from high-end smartphones with multiple-lens cameras. These often use the group’s advanced image sensors.

According to data provider Gartner, Sony controls 51.5% of the world’s $15 billion image sensor market. They are supplying most global smartphone makers including Apple Inc and Huawei Technologies Co Ltd.

The impact of the outbreak already reduced the group operating profit by 68.2 billion yen. This was for the year ended this March, the company said. It had also hit the company in the stock market.

One bright spot for Sony was its gaming business. It reported a narrower-than-expected profit decline for the year that ended in March.

The business had a positive impact of 2.8 billion yen from the coronavirus outbreak. Consumers locked down at home looked for entertainment and downloaded more gaming software.

It is scheduled to launch its PlayStation 5 (PS5) during the year-end holiday shopping season. That’s seven years after its previous generation games console.

The company reiterated the year-end timing for the PS5 launch. This denies media speculation that the coronavirus would impact production and cause a major delay. Sony has nevertheless been forced to announce delays to major game titles including The Last Of Us Part II.

Stock trading reports that the Japanese electronics and entertainment company’s quarterly profit tumbled. This is as the coronavirus pandemic delayed music and movie releases while disrupting product supply chains.



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