- Sony reported a 29% drop in operating profit for its second quarter as the company suffered from weakness in its image sensor business.
The PlayStation DualSense controller and the PlayStation 5 console.
Jakub Pozhicki | Nurphoto | Getty Images
Sony on Thursday reported a 29 percent drop in operating profit in its fiscal second quarter as the Japanese electronics giant suffered weakness in its image sensor, or chip, business.
Here’s how Sony fared in the September quarter against LSEG consensus estimates:
- Revenue: ¥2.8 trillion ($18.5 billion), vs. ¥2.87 trillion expected. This represents an increase of 8% year-on-year.
- Operating profit: 263 billion Japanese yen vs. 304.4 billion yen expected. This marks a 29% year-over-year decline.
Sony attributed the significant drop in profit to weakness in its image sensor business, as well as a decline in profits in its financial services and entertainment, technology and services business.
The company said profit at its chip division fell more than 28 percent in the fiscal second quarter.
Sony supplies camera chips to consumer technology giants like Apple, which uses its semiconductors in its iPhones.
The division suffered from increased costs related to depreciation expenses, mass production of a recently launched image sensor for mobile products, increased production costs and reduced sales of image sensors for industrial and social infrastructure, Sony said.
Despite the drop in profit, the company raised its full-year sales forecast, saying it now expects total sales of 12.4 trillion yen (up from an earlier forecast of 12.2 trillion yen) as it took advantage of positive exchange rates .
The Japanese yen has weakened significantly against the dollar, and Sony makes most of its revenue outside the US
Sony also attributed an improvement in its revenue forecast to an expected strong performance in its video games, music and imaging and sensor solutions businesses.
Sony expects its games and network services business, which is responsible for the popular PlayStation console, game studios and game networks, to post higher-than-expected full-year sales, boosting performance.
The company had a strong start to its newly released game Marvel’s Spider-Man 2, which is exclusive to PS5. The game sold more than 2.5 million copies in its first 24 hours, making it the fastest-selling PlayStation Studios game in history in a 24-hour period.
The company said it expects its PlayStation 5 console to reach its goal of 25 million units shipped in 2023. This is an important milestone as analysts and investors watch closely for signs of Sony’s PS5 performance.
Sony’s results came after Nintendo earlier this week reported better-than-expected fiscal second-quarter sales and profit on Tuesday as it got a boost from “Super Mario Bros. Movie” and the highly anticipated May release of “The Legend of ” The game Zelda: Tears of the Kingdom.
In an interview, Sony’s Eric Lempel said this will mark the first year the PS5 is “fully stocked” after the shortages that plagued the company in 2020 and 2021 due to supply chain constraints.
“We started [PS5] as early as 2020,” Lempel told CNBC. “We suffered from the same supply chain issues that everyone faces. Unfortunately, we were unable to deliver a PS5 to a user who requested one.”
Thursday’s results follow a fiscal first quarter in which Sony reported a 33 percent year-over-year rise in revenue to ¥3 trillion, but a 31 percent year-over-year drop in profit to ¥253 billion.
At the time, the company pointed to weakness in its financial services and picture division, which saw a small decline amid strikes by the Writers Guild of America and other unions to protest the use of artificial intelligence to generate movie scripts.
Sony said in its earnings call after Thursday’s announcement that it expects the strike to have an impact on the next financial year, but the company is committed to cost control measures to minimize it.