Sony Pictures Swings to Quarterly Profit of $3.7 Million

Men in Black International-Publicity Still 10-H 2019
Giles Keyte/Sony Pictures

Overall profits at Sony Corp. fell 33 percent to $1.38 billion.

Sony Pictures posted a profit of $3.7 million for the fiscal first quarter, which ran April to June, compared to a $68 million loss in the same period last year, Sony Corp. reported in Tokyo on Tuesday.

Film unit revenue was up 11 percent to $1.7 billion, with the underperforming Men in Black: International the biggest release in the quarter. There was no big release in the same quarter last year, and sales from the motion pictures segment were up strongly, sales from television productions up slightly and down slightly at media networks.  

"The first fiscal quarter usually results in a loss in the pictures division because it is a quiet period for theatrical releases. This is the first profit in the quarter for five years," Sony chief financial officer Hiroki Totoki told investors at the company's headquarters in Tokyo.  

Spider-Man: Far From Home, which recently passed the $1 billion mark at the global box office, was released at the start of July, just after the quarter ended, and will show up in the results of the next period.

"Spider-Man: Far From Home has passed the box office of Jumanji and is the first fully owned Sony movie to earn more than $1 billion," said Totoki, referring to Skyfall, which took more than $1.1 billion but was produced in partnership with Eon Productions and MGM.

The profit forecast for the full year to March 2020 for the pictures division remained unchanged at ?65 billion, or $600 million at current rates.

"We do have tentpole releases coming up, but it is only the first quarter, so we are leaving the forecast at the same level," explained Totoki.

Overall revenue at Sony Corp. was down 1 percent to $17.52 billion compared with the same period last year, with earnings down 33 percent to $1.38 billion. However, operating profit was up 18 percent at $2.1 billion.

Sony's music division logged profits up 6.2 percent to $353 million, with sales up 21 percent to $2.02 billion, due to an increase in streaming revenue and the consolidation of the EMI stake, which raised revenue from publishing. Best-selling artists for Sony in the quarter were Khalid with Free Spirit, Lil Nas X with Old Town Road and Pink with Hurts 2B Human.

The PlayStation 4 (PS4) continued to deliver for Sony, with hardware sales up but with revenue down slightly at $4.21 billion on falls in first-party software sales and the negative impact of currency exchange rates. Revenue from sales of PlayStation games online continued to grow, and the proportion of software sales through downloads passed the 50 percent mark for the first time. 

"Subscribers to the PlayStation Plus service were down slightly from the previous quarter, as expected, but we believe that this business will continue to grow," said Totoki.

Sony sold 3.2 million PS4s in the quarter, the same as the previous year, a strong result given the age of the console, now in its seventh year on the market. The PS4 has sold a total of almost 100 million units and is on course to be the fastest console to reach that milestone.

Totoki acknowledged that sales of the console in the quarter were slightly below expectations due to news of plans for the next-generation console reaching gamers.

Operating income at the game division was down just under 10 percent to $679 million. The forecast for profits at the division for the full year was unchanged.

Elsewhere, the electronic, products and solutions division saw a fall in profits impacted by foreign exchange, while financial services recorded higher revenue and operating income.

Sony's imaging and sensing solutions division, which includes sensors for smartphone cameras, continued its strong performance with sales up 28 percent to $2.1 billion (?231 billion) and profits up 20 percent to $456 million (?49.5 billion). This is the division hedge fund Third Point's Daniel Loeb has called for Sony to spin off into a separate company.

The conglomerate's forecast for full-year profits remains at ?500 billion, or $4.6 billion at current rates.

Sony stock closed down slightly Tuesday in Tokyo at ?5,859 ($53.95) before the earnings report, while the Nikkei 225 stock index was up slightly.