Sony Group reported a sharp decline in fourth-quarter net profit due to losses in its electric vehicle joint venture with Honda Motor and weakness in gaming and other businesses. The Japanese entertainment and electronics company said on Friday that its net profit fell 63% year-on-year to 83.12 billion yen ($529.6 million) in the fiscal fourth quarter ended in March.
The performance was lower than analysts’ forecast of 202.24 billion yen.
Sony Group said its joint venture with Honda Motor Co., which has stopped selling its electric car models, recorded an equity method investment loss of 44.9 billion yen.
Its gaming, movie and image sensor businesses all saw operating profits decline. Operating losses in its entertainment technology business narrowed.
Fourth quarter revenue increased 8.3% to 3.036 trillion yen.
For the fiscal year starting in April, the company expects revenue to fall 1.4% to 12.300 trillion yen and net profit to rise 12.5% to 1.160 trillion yen.
The company’s shares have fallen 22% this year as of Thursday, weighed down by concerns over the rising cost of memory chips used in game consoles and a possible deterioration in consumer sentiment amid conflict in the Middle East.
Sony said it plans to cancel 3% of its outstanding shares on May 29. Affected by the surge in component costs, Sony's Tokyo-listed shares have fallen by more than 20% this year. This buyback is expected to alleviate the downward pressure on the stock price. The company also said that this year's PS5 game console sales target will depend on whether it can purchase sufficient memory chips for this flagship console at a reasonable price.
Currently, Sony is promoting a comprehensive restructuring of its business, spinning off its loss-making hardware segments, and concentrating resources on developing intellectual property-driven businesses. The company is about to finalize a nearly US$4 billion music copyright library acquisition deal, covering the works of well-known artists such as Justin Bieber and Neil Young. Earlier this year, Sony sold its controlling stake in the TV business to a joint venture with China's TCL.