Sony Film Unit Posts 227 Percent Jump in Quarterly Profit, Helped by 'Spectre'
The film unit profit of $170 million was also boosted by 'Hotel Transylvania 2' and "lower overhead expenses," with Sony's CFO also saying that "the music market has finally bottomed," thanks to streaming services.
Sony Pictures saw a 227 percent rise in operating income to $170 million (￥20.4 billion) in the October-to-December quarter compared to the same period in 2014, thanks to higher theatrical revenue, the company said in Tokyo on Friday.
Its biggest box-office hit during the quarter was Spectre, which brought in more than $875 million worldwide, though some of that came in 2016.
Hotel Transylvania 2, which was released at the end of the previous quarter, brought in more than $450 million globally.
Revenue at the film division rose to $2.18 billion (￥262 billion) for the fiscal third quarter, compared to $1.70 billion in the same quarter of the previous year. The revenue increase was primarily driven by higher theatrical revenues, as the current quarter benefited from the strong worldwide theatrical performances of Spectre and Hotel Transylvania 2, partially offset by lower home entertainment revenues, as the same quarter of the previous fiscal year benefited from the home entertainment performances of 22 Jump Street and The Equalizer," Sony said.
It added that the higher film operating profit was due to the revenue gains, "lower overhead expenses as compared to the same quarter of the previous fiscal year, primarily due to a reduction in incentive compensation expense as well as insurance recoveries related to losses incurred from the cyber attack on SPE’s network and IT infrastructure in the fall of 2014." That was partially offset by higher theatrical marketing expenses.
Despite much-improved results in the quarter, Sony left its full fiscal-year forecast for operating income at the pictures division unchanged at $290 million (￥35 billion), which would mark a drop of around 40 percent from the previous year.
"Sony Pictures has been identified as a growth driver, and the production of movies is the largest part of that business," said deputy president and CFO Kenichiro Yoshida in reply to a question about how Sony planned to improve profitability at the film division. "The cycles in the motion pictures business are very long, so it takes time to create hit films and revive the division. Our television program production business, on the other hand, is doing very well."
Overall quarterly operating income at Sony rose 11 percent to $1.69 billion (￥202 billion) over the same quarter a year previously, helped by improvements in its electronics and music businesses, as well as strong sales of its PlayStation 4 console. Revenue for the quarter rose slightly to $21.5 billion (￥2.58 trillion).
Earlier this week, Sony announced a reorganization of its PlayStation business, merging the hardware and software sides, and relocating its headquarters from Tokyo to California.
Sony Music had another strong quarter, generating $228 million (￥27.4 billion) in operating profit thanks to albums from Adele and One Direction.
Sony revised its forecast for operating income for its music division for the fiscal year ending March upwards by more than 13.5 percent to ￥84 billion, or $696 million at current exchange rates.
"The stronger results and higher forecast are due to both the hit releases from our artists and because the music market has finally bottomed out thanks to the growth in revenue from streaming systems," such as Spotify and Apple Music, said Yoshida. He later added: "We are having quite significant momentum" in music streaming.
The devices division fell into the red to the tune of nearly $100 million following the slowdown in sales of Apple's iPhone and the handsets of other smartphone manufacturers, for which Sony supplies components, as well as a negative impact from currency fluctuations.
Sony left its full-year profit forecast unchanged at ￥140 billion, or $1.16 billion at current rates.
Sony Corp.'s stock closed up 6.1 percent at ￥2,523 ($20.90) in Tokyo when the markets closed just before the earnings results were announced.