Japan’s Sony Corp fell 6 percent in Tokyo trading after a sharp drop in first-quarter profit amid poor results from its film and financial divisions.

Operating profit slumped 31 percent, and comments from Sony executives about demand for its gaming and image sensor divisions also raised concerns.

The PlayStation 5 console launched in late 2020, but supply has been severely impacted by supply chain issues during the COVID-19 pandemic. While those issues have eased, Sony said sales in the April-June quarter were still below expectations. Its annual sales target is 25 million units.

Sony sold 3.3 million PS5 units in the quarter. By comparison, Nintendo’s Switch console, now in its seventh year, has sold 3.9 million units over the same period, with consumers rushing to play the latest “Zelda” game.

Sony said a promotional campaign that began in July is improving PS5 sales momentum.

“Sony is starting to discount the PS5 in the West, which is never a good sign,” said Serkan Toto, founder of Kantan Games consultancy.

“The company has a lot of work to do, first and foremost, making sure these popular first-party titles come out faster.”

Marvel’s Spider-Man 2 hits theaters in October ahead of the crucial year-end shopping season. Its predecessor has sold over 13 million units.

Sony, a leading maker of camera image sensors, also lowered its forecast for a gradual recovery in the smartphone market, saying it does not expect a recovery until 2024 at the earliest due to weak demand in major markets.

The company cut its forecast for annual operating profit for the division by 10%, citing the impact of lower sales.

Sony said smartphone makers’ procurement adjustments had a major impact on the second quarter.

The current fiscal year “will be tough” for the sensor division, Jefferies analyst Atul Goyal wrote in a note to clients, adding that next year’s growth is expected to be tough. Profit margins will be higher.

© Thomson Reuters 2023


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