Sony Film Unit Full-Year Profit Down 34 Percent

Sony CEO Kaz Hirai

The box office success of 'Spectre' was not enough to prevent a fall in profit for Sony Pictures Entertainment.

Sony Corp.'s film unit recorded a full fiscal-year operating profit of $341 million (¥58.5 billion), down 34 percent, the company said Thursday.

The drop came despite a revenue gain at Sony Pictures Entertainment of 6.8 percent to $8.3 billion (¥879 billion). Operating income was negatively affected by weaker high-margin home entertainment sales and a stronger yen.

Spectre, which brought in more than $880 million at the global box office, and Hotel Transylvania 2, were key contributors to earnings, but the company also had such underperformers as The Walk

Revenue at the pictures division was also boosted by strong VOD sales for Breaking Bad, Better Call Saul and The Blacklist, as well as higher television advertising revenues in India and the U.K.

"The biggest challenge in the pictures division is in movie production, and we regard 2016 as a transition period as the new team works to turnaround the business," said executive deputy president and CFO Kenichiro Yoshida.

For January to March, the final quarter in Sony's fiscal year, revenue was up 8.7 percent to $2.96 billion (¥320.7 billion) and operating profit rose 15 percent to $484 million. 

Sony’s forecast for the pictures division in the current fiscal year that runs through March 2017 is for growth in revenue of 7.7 percent to ¥1.01 trillion yen, $9.3 billion at current exchange rates, and a rise in operating profit of 11.7 percent.

Overall, Sony Corp., led by CEO Kaz Hirai, recorded a full-year net profit of $1.3 billion (¥145 billion), only its second year of net profitability in the last seven years. Revenue came in at $72.8 billion (¥8.1 trillion), down slightly from the previous year and affected negatively by the stronger yen.

Sony's music unit recorded a jump of 44 percent to $773 million (¥87 billion) in operating profit as the global music market recorded its first expansion in 16 years in 2015. The company said its music sales, which grew 10.4 percent to $5.47 billion, were helped by higher revenue from streaming services, as well as strong album sales of Adele’s 25, One Direction’s Made in the A.M. and David Bowie’s Blackstar

Video games continued to be a bright spot for Sony as sales of software for the successful PlayStation 4 console helped push revenue up 12 percent to $13.7 billion (¥1.55 trillion). Operating profit at the games division jumped 84 percent to $785 million (¥88.7 billion).

Sales of games and other content through the PlayStation Network continued to grow. But Sony warned that the earthquakes in the Kumamoto region this month could affect production of the PS4 due to damage at suppliers that have factories in the area.

The impact of the earthquakes also prevented the company from issuing a full financial forecast for its new fiscal year, with Sony continuing to assess the situation, Yoshida said.  

Sony's stock closed down 2 percent in Tokyo trading before the earnings announcement, relatively outperforming the Nikkei 225 index, which dropped 3.6 percent.
 

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