Sony Beats Estimates, Supported by Significant Growth in Gaming

Equities Staff  |

Image Source: Sony

Sony surprised the market with a better-than-expected earnings report Tuesday, posting a profit of ¥233.3 billion ($2.2 billion) in the April-June quarter, up over 53% from the prior year’s period.

The company handily beat analysts’ estimates for the quarter of ¥143.21 billion, according to data from Refinitiv.

Sales for the quarter increased 2% to ¥1,968.9 billion ($18.6 billion).

For the full fiscal year ending March 2021, Sony projects:

  • Sales of ¥8,300 billion ($78.3 billion)
  • Operating income of ¥620 billion ($5.8 billion)
  • Pre-tax income of ¥685 billion ($6.5 billion)
  • Net income of ¥510 billion ($ 4.8 billion)

Click to enlarge

Image source: Sony quarterly earnings presentation, August 4 2020.

Significant strength in the company’s gaming and financial services segments offset weakness in other operating areas:

Segment highlights for the quarter included (% change from prior year’s period):

Gaming and Network Services

  • Sales up 32%
  • Operating income up 68%
  • PlayStation Plus subscribers reached 45 million
  • Expect other minority investments similar to Bilibili and Epic Games

Music

  • Sales down 12%
  • Operating income down 9%
  • Continued growth in paid subscription services

Movies

  • Sales down 6%
  • Operating income up from ¥0.4 billion to ¥24.7 billion (due to virtually zero marketing costs in the absence of movies)
  • Delays in theatrical releases will negatively impact financial results for two to three years

Electronics

  • Sales down 31%
  • Operating loss of ¥9 billion compared to previous operating income of ¥25 billion
  • Seeing customer demand beginning to recover

Imaging & Sensing

  • Sales down 11%
  • Operating income down 49%
  • Don’t expect near-term growth; this segment will be a longer-term story

Financial Services

  • Sales up 33%
  • Operating income up 2%
  • Business (now fully owned by Sony) is a stable, high-margin unit

_____

Source: Equities News

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