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Sony lifts operating profit outlook to 1 tril. yen on firm movie sales

A woman views products at a Sony electronics store in Bangkok, Thailand, on Oct. 12, 2021. (AP Photo/Sakchai Lalit)

TOKYO (AP) -- Sony Group Corp. raised on Thursday its operating profit forecast for the full fiscal year to 1.04 trillion yen ($9.2 billion), as strong movie and music businesses are expected to make up for slower-than-expected growth in its electronics product segment.

    The chief financial officer said the same day the Japanese electronics giant is considering cooperating with Taiwan Semiconductor Manufacturing Co. in building a chip plant in Japan, the company's first comment on the matter.

    Sony now expects its operating profit to top the 1 trillion yen mark for the first time in the current business year ending next March. The company started reporting earnings under International Financial Reporting Standards from this fiscal year, changing from U.S. accounting standards.

    The latest outlook compares with 980 billion yen projected in August and represents an 8.9 percent rise from the previous business year.

    The company lifted its net profit projection for the full year to 730 billion yen from the 700 billion yen forecast earlier, and sales are now seen at 9.90 trillion yen, up from its previous forecast of 9.70 trillion yen.

    The latest net profit and sales projections respectively represent a 29.1 percent drop and 10.0 percent growth from the previous business year.

    The upward revision reflects higher sales from the movie business, as restrictions introduced as part of measures against the coronavirus have been eased in major markets.

    "In the movie segment...we've seen more theaters reopening to release major titles mainly in the United States," Sony's CFO Hiroki Totoki said in an online press conference.

    The company expects sales growth in the segment to be driven by the release of titles in the second half including "Ghostbusters: Afterlife" and "Spider-Man: No way home," he said.

    The music streaming service is also faring well, Totoki said, adding that artists from Sony's music group company often ranked in the top 100 songs most streamed on Spotify in the July to September period.

    But Totoki said the company is feeling a larger impact from supply chain disruptions stemming from the coronavirus resurgence in South Asian countries and a global chip shortage, and the parts shortages leave the outlook for the electronics business uncertain.

    Sales of the PlayStation 5 game console launched in November last year slowed due to the chip crunch, Totoki said. Still the company maintained its global sales target at 14.80 million units for this fiscal year.

    The CFO said a stable supply of chips for image sensors used in smartphones is important and the company is studying joining hands with TSMC after the Taiwanese chip manufacturer said it is planning to build an advanced chip-making factory in Japan in 2022 and start operations there in 2024.

    "Stable chip procurement is a crucial issue and (the new plant) could be a solution," Totoki said.

    The plant is expected to be jointly run with Sony, and auto parts maker Denso Corp. is also considering joining the project, according to sources familiar with the matter.

    Japanese Prime Minister Fumio Kishida said earlier this month TSMC will invest around 1 trillion yen in the factory and that his government will provide financial aid as stable chip procurement serves to improve Japan's economic security.

    Totoki said Sony is in talks with the Taiwanese company and Japan's industry ministry but declined to elaborate further.

    For the fiscal first half ended in September, Sony's net profit declined 34.8 percent from the same period last year to 424.94 billion yen on sales of 4.63 trillion yen, up 13.7 percent, a record high for the first-half period.

    Its operating profit in the six months rose 11.5 percent to 598.53 billion yen.

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