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Thursday, November 30, 2023

Sony achieves record annual sales and beats forecasts for net profit


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On Friday, Sony announced record annual sales of 11.5 trillion yen. The company attributed the “significant increase” to a weaker yen as well as growth in its entertainment and image-sensor industries.

The amount of revenue exceeded the previous record set by the Japanese conglomerate in the previous fiscal year of 9.9 trillion yen ($73 billion).

Total sales were helped to increase by a declining yen, which boosts profits for businesses like Sony that sell goods internationally.

According to Sony, other favorable factors included “higher revenues for anime streaming services,” including those resulting from the company’s acquisition of Japanese cartoon juggernaut Crunchyroll.

The year ended in March with a net profit of 937.1 billion yen, beating the forecast of 870 billion by 6.2 percent.

Sony, however, forecast a lower net profit of 840 billion yen for the current fiscal year, which started in April. This prediction was partially due to technical issues with tax expenses.

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It anticipates keeping its yearly sales at 11.5 trillion yen.

Sony “will probably have a tough one” in the first half of 2023–2024, according to Hideki Yasuda of Toyo Securities.

Prior to the release of the earnings report, he told AFP that global shipments of computing equipment “declined in the January-March quarter due to… the slowing down of economies”.

Yasuda added that it’s likely that the consumer goods company won’t see the effects of these trends right away.

Boost from Miley Cyrus

In 2022–2023, Sony sold 19.1 million PlayStation 5 consoles, an increase from the 11.5 million units it sold the year before when it was having supply chain issues, partly as a result of Covid lockdowns in China.

The company’s president, Hiroki Totoki, told reporters on Friday that “distribution inventories have been normalized, enabling almost worldwide delivery without customer delays.”

Totoki, who assumed the top position this month while keeping his previous position as chief financial officer, stated that “we will continue to accelerate PS5 penetration and aim to sell 25 million units in the current financial year.”

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With rival Microsoft attempting to get its $69 billion acquisition of popular “Call of Duty” maker Activision Blizzard past regulators, Sony and Microsoft have been engaged in a struggle for gaming supremacy.

However, this week the UK’s Competition and Markets Authority blocked the acquisition on the grounds that it would hurt cloud gaming competition.

Both US companies will appeal the decision, but analysts have cautioned that it may spell the end of the massive merger.

Sales of first-party video games rose, according to Sony, in 2022–2023, and the company reported that sales of the image sensors used in smartphone cameras increased thanks to “an improvement in the product mix, partially offset by a decline in unit sales.”

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Miley Cyrus’s single “Flowers,” which was released in January, was praised by Totoki as “a huge hit on Spotify with a record number of streams in a single cycle.”

Sony owns the Columbia Records imprint, which includes Cyrus.

The surge in popularity of Japanese anime has also been profitable for Sony, which spent $1.17 billion to acquire streaming service Crunchyroll in 2020.

According to Totoki, “Animation is growing into a global entertainment industry, with foreign markets accounting for 48% of the global Japanese animation market, which is expected to reach 2.7 trillion yen in 2021.

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