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Sony forecasts revenue may drop 30% for this fiscal year

Sony Corp. has warned due to the effect of the coronavirus pandemic on customer confidence and global supply chains, its operating profit could plunge by 30 per cent or more for the current fiscal year.

The company sounded the cautionary note as it revealed an operating profit of 35.45 billion yen (USD 331 million) for the quarter ended in March, down 57 per cent from the same period last year. Revenue has also fallen to 1.75 trillion yen. For the first time since 2016, after the Kumamoto earthquake impaired its operations, Sony has refused to provide a complete forecast for the current fiscal year.

In recent years, Chief Executive Officer Kenichiro Yoshida has overhauled the technology brand to concentrate on products such as smartphone camera sensors and the PlayStation gaming business, but many of its units remain vulnerable to people being on a forced lockdown. Consumers can not go out buying phones or electronics, or watch Sony movies, while the factories that manufacture their products are battling to return to full capacity.

“Consolidated operating profit for the fiscal year ending March 31, 2021, is currently expected to be at least 30 per cent lower than the amount reached in the previous fiscal year,” said the company in a presentation focused on its latest best assumptions.

“COVID-19 can have a lasting effect on markets such as Brazil, India and Southeast Asia because it could reduce demand for consumer electronics, movie theatres and music concerts,” said Masahiro Wakasugi, Bloomberg Intelligence analyst.

In recent years, Sony has gained from its developments in image sensor production, which are integrated into many of the world’s leading smartphones, including iPhones from Apple Inc. This year the industry was expecting a boom with the introduction of the next-generation wireless technology called 5G, but shipments dropped at the fastest pace ever in the first three months due to supply and demand constraints.

Sony said the PlayStation 4 console supply has been affected to some degree by the COVID-19 pandemic, but the output is adequate to meet the console’s current demand and sales remain steady. Meanwhile, the PlayStation 5 is still on schedule for a release at the end of the year. Software for the upcoming console is still on track because it has not had any significant effects on the production of games, the company said.

Sony said the virus had not adversely impacted the operations of its image sensors. However, its consumer electronics unit was hit, affecting the television factories in Malaysia, Mexico and Slovakia. Limited work has resumed on the plants. Television revenues declined, especially in Europe, India and Vietnam. There has also been a fall in demand for digital cameras.

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