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Sony posts record net profit in FY 2018 on solid game, music sales

This Feb. 1, 2019 photo shows the logo of Sony Corp. in Tokyo. (Kyodo)

TOKYO (Kyodo) -- Sony Corp. said Friday it expects its net profit to sag more than 45 percent in the current fiscal year, after posting a record profit in fiscal 2018, squeezed in part by costs to develop a next-generation video game console.

The electronics giant expects group net profit to fall 45.4 percent to 500 billion yen ($4.47 billion) in the year through March 2020.

The company projects group operating profit will fall 9.4 percent to 810 billion yen, citing the stronger yen that erodes overseas profits when converted into the home currency.

Group sales are forecast to rise 1.5 percent to 8.8 trillion yen, driven by higher sales of image sensors used for smartphones and revenues from new movies and TV programs set to be released.

Sony Interactive Entertainment Inc. said this month that it aims to release a next game console as early as 2020.

In the fiscal year ended March, Sony reported a record net profit of 916.27 billion yen, up 86.7 percent from the previous year, on strong demand for its game software, subscription-based gaming services and music streaming services.

It also logged a record operating profit of 894.24 billion yen, up 21.7 percent from a year ago, on sales of 8.67 trillion yen, up 1.4 percent.

Sony said it sold 17.8 million units of its nearly six-year-old PlayStation 4 game console in the last fiscal year, down from 19 million the previous year, and expects sales to further fall to 16 million in the current fiscal year.

The drop in game hardware sales was more than offset by growth in sales in software and income from its subscription services for PlayStation users.

Sony's net profit also rose after the acquisition of New York-based EMI Music Publishing last November, a move highlighting its increased focus on investing in content and intellectual property in music, movies and games.

Sony is working on developing a new game console amid intensified competition in the gaming industry. Google LLC said in March it will launch its own cloud gaming service in 2019, while Apple Inc. said it will roll out new game subscription services this fall.

Chinese internet services giant Tencent Holdings Ltd. has reportedly won permission to distribute Nintendo Co.'s Switch console in China, a move that could see the Japanese maker gain ground in the world's second-largest economy.

The current PS4 hit the market in November 2013, with sales volume reaching 91.6 million units at the end of December 2018.

"We have been the leading company in offering game experience. At present 90 million people around the globe are enjoying our platform," Chief Financial Officer Hiroki Totoki said at a press conference.

"We would like to seek growth by using our customer base, which is our strong point."

Meanwhile, losses in its struggling mobile phone segment widened for the just-ended fiscal year. Totoki said he expects restructuring steps and product development efforts to help the business return to profitability in fiscal 2020.

Sony also said Friday that it is withdrawing profit targets it set under its business plan covering three years through fiscal 2020, saying that the environment surrounding the businesses is changing too rapidly.

Sony had aimed for 110 billion to 130 billion yen in operating profit in its music segment and 130 billion to 170 billion yen in its game and network segment in fiscal 2020.

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