Sony expects to earn ¥1.28 trillion ($8.7 billion) in operating profit this fiscal year, a slight 0.3% rise, even after absorbing a ¥100 billion ($680 million) hit from U.S. President Trump’s trade war tariffs.
The update shared on X pointed out that even though Sony beat analyst expectations in the latest quarterly results, the company still gave a cautious profit outlook for the year ahead, highlighting the uncertainty caused by global trade tensions and ongoing policy shifts.
Sony beats earnings expectations but warns of tariff damage
Sony exceeded analyst expectations, with its full-year operating profit for the year ending in March rising by 16% to ¥1.4 trillion ($9.5 billion), which reflected its ability to perform well across its entertainment, gaming, and semiconductor divisions despite global economic pressure.
The company proved that it could outperform market predictions even as it faced inflation, currency fluctuations, and a slow gaming market by recording an operating income of ¥203.6 billion ($1.4 billion) in the year’s final quarter, which is higher than the ¥192.3 ($1.3 billion) billion average estimate from analysts.
However, Sony’s operating income for those three months was still 11% lower than the profit reported during the same quarter last year. This suggests instability in its earnings and raises questions about whether the company can sustain this momentum going forward.
What’s more, the company projects its operating profit will rise by 0.3% to ¥1.28 trillion ($8.7 billion), below the analyst forecast of ¥1.39 trillion ($9.5 billion), showing the company expects slower growth in the short term.
Sony claims that Donald Trump’s trade tariffs, which could impact approximately ¥100 billion ($680 million), largely contribute to this conservative forecast because they continue to affect global supply chains and component costs for electronics and manufacturers like the company.
Sony still made it clear that the ¥100 billion ($680 million) estimate doesn’t include any changes to the new trade deal signed on May 12 between the United States and China, because the company released its guidance days before the agreement.
Because of this, the tariff’s impact could be significantly higher or lower, but that depends on how the deal is implemented and whether it changes the flow and cost of goods. As such, Sony warned investors that the real financial effects may change during the fiscal year and that the company would continue to monitor developments in the trade relationship.
The company’s share price rebounded by more than 2% in afternoon trading after falling over 3% during the morning session because investors responded positively to the earnings announcement.
Sonny announced that it plans to buy back ¥250 million ($1.7 million) worth of shares from the market to reduce the number in circulation, increase earnings per share, and boost the overall value of the remaining shares.
Furthermore, the company plans to spin off its financial services division to focus on its core entertainment and technology businesses, such as gaming, movies, and semiconductors. To do this, Sony will separate its financial service unit from the rest of its operations while aiming to complete the project by October and distribute over 80% of the company’s stock to its current shareholders as dividends.
Sony continues to face challenges and opportunities in the gaming sector, as the company only sold 2.8 million PS5 units during the fourth quarter, a 38% drop from last year. Supply chain issues and inflationary pressure affected consumer spending and decreased the gaming operating profit by 12.5% compared to last year. As a result, the company raised PS5 prices in Europe and the UK to try and maintain profitability.
Despite these challenges, Sony remains optimistic about its gaming market because it expects profits to increase by 16% next year when it releases first-party games like “Ghost of Yotei” in October.
Games like “Grand Theft Auto VI” by Take-Two Interactive have been delayed until 2026, but Sony expects it to bring in a lot of revenue, even though it would have boosted PS5 console sales. Despite these delays, the company remains confident that its strong lineup of exclusive games will drive growth in the coming months.
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