Sony sees highest profit since 1998 on games, camera chips

Sony Corp is targeting its highest annual operating profit in two decades.
Sony Corp is targeting its highest annual operating profit in two decades.PHOTO: EPA

(BLOOMBERG) - Sony Corp is targeting its highest annual operating profit in two decades, thanks to continued dominance in gaming and strong growth in phone-camera chips.

Operating profit is on track to reach 500 billion yen (S$6.26 billion) for the fiscal year through March 2018, the Tokyo-based company reported Friday (Apri l 28) .

That was in line with the 507 billion yen average projection by analysts.

Last week, Sony reported estimate-topping preliminary results for the period through March 2017, triggering a share rally.

Sony's return to profitability last seen during the years when it dominated consumer electronics validates chief executive officer Kazuo Hirai's efforts to turn around the company.

Since taking the helm in 2012, he steered the firm through years of restructuring and put more focus on gaming, camera chips and finance.

With the turnaround now mostly behind him, focus is now shifting to how Hirai plans to switch from fighting fires to igniting more growth.

"The question is what story comes after this? That's what's on everyone's mind," Masahiko Ishino, an analyst at Tokai Tokyo Securities, said prior to the result.

"Do you have killer hardware? Do you have killer entertainment? The answer is they're lacking something."

Operating profit in the fiscal year through March 2017 slipped 1.9 per cent to 288.7 billion yen, while net income halved to 73.3 billion yen as earthquakes in Kyushu a year ago derailed the company's chip and camera businesses.

Revenue fell 6.2 pe rcent to 7.6 trillion yen.

Games delivered a significant impact, with operating profit climbing 53 per cent to 135.6 billion yen.

Sony is leaning more than ever on its PlayStation business.

Operating profits for the division are expected to climb to 170 billion yen, accounting for a third of total profit, as the company cashes in on the PlayStation 4's later life-cycle stage, typically the most profitable period for consoles.

For the first time, sales from online games, downloads and streaming services exceeded that of hardware sales, Sony said.

"The turnaround I think is about 70 to 80 per cent done, so from here it will be more about steady growth without significant ups and downs in profits," David Dai, an analyst at Sanford C. Bernstein & Co, said prior to to the results.