The new SONY ($6758) (+1.32%) CEO Totoki expressed his gratitude for his appointment and spoke about his commitment to realization of the creative entertainment to create new value and drive Sony's evolution and further growth.
The financial results for the third quarter of fiscal year 2024 were then presented, as well as an outlook for the full year:
Group sales excluding financial services increased by 7% year-on-year to JPY 3,695.7 billion. Operating profit increased by 10% to JPY 423 billion. Group sales including financial services rose by 18% to JPY 4,409.6 billion and operating profit increased by 1% to JPY 469.3 billion, a record high for the third quarter. The net profit increased by 3% to JPY 373.7 billion
For the full year 2024, the figures were as follows:
Group revenue excluding financial services was revised upwards slightly to JPY 11,900 billion. Operating profit was revised upwards by 2% to JPY 1,190 billion. Group sales including financial services were revised upwards by 4% to JPY 13,200 billion. The Operating profit was revised upwards by 2% to JPY 1,335 billion. The Net profit was revised upwards by 10% to JPY 1,080 billion.
Games and Network Services: There was a significant upswing here, with sales up 16% to JPY 1,682.3 billion, primarily due to higher hardware (especially PlayStation 5) and third-party software sales. Operating profit climbed an impressive 37% to JPY 118.1 billion, a record high for the third quarter in this segment. This increase was mainly driven by higher revenues from network services and third-party software as well as improved hardware profitability. Particularly pleasing was the 5% increase in monthly active users (MAUs) in December to 129 million, which is the highest number in PlayStation's history. A large proportion of PS5 purchasers in the quarter were new customers (over 40%) which, along with the moderate decline in the PS4 user base, contributed to MAU growth. PlayStation Plus revenue increased by 20% year-on-year, driven by higher average revenue per user thanks to the move to more expensive subscription models and price adjustments.
Music: Revenue increased 14% to JPY 481.7 billion, mainly due to higher streaming revenue and the consolidation of ePlus Inc. into Visual, Media and Platform. Operating profit increased by 28% to JPY 97.4 billion, mainly due to higher revenues. Streaming revenues also recorded growth of 9% compared to the previous year. Successes from artists such as Tyler, The Creator, Bad Bunny and Beyoncé were particularly noted. Sony Music is stepping up its efforts to promote local artists in emerging markets and strengthen relationships with independent labels, particularly in Latin America and India.
Pictures: Sales increased 9% to JPY 398.2 billion, primarily due to higher revenues from theatrical films such as "Venom: The Last Dance" and exchange rate effects. However, operating profit fell by 18% to JPY 34 billion, mainly due to higher marketing costs for theatrical films. Despite the strikes in the USA, the production of films and TV shows is recovering. The success of the anime series "Solo Leveling" on Crunchyroll was highlighted, and Sony plans to strengthen its commitment to anime fans by launching "Crunchyroll Manga".
Electronics, Technology & Services: Sales fell 4% to JPY 704.5 billion, mainly due to lower TV sales. Operating profit remained almost unchanged at JPY 77.1 billion. The mirrorless camera market experienced a stable recovery after the COVID-19 pandemic and almost reached the 2012 level in 2024. Sony is planning further cost reduction measures to increase resilience.
Imaging & Sensing Solutions: Sales remained almost unchanged at JPY 500.9 billion as lower sensor sales for mobile devices offset the positive impact of foreign exchange effects. Operating profit fell slightly by 2% to JPY 97.5 billion. Despite a decline in the current quarter due to past production problems, cumulative sales for the first nine months of the fiscal year increased by an impressive 15% year-on-year. Sony expects stable growth in the mobile sensor segment, mainly due to rising sales prices resulting from larger sensor areas and higher-end models. The slowdown in the growth of the electric vehicle market, particularly in the US and Europe, is having an impact on the automotive sensor segment. Despite this, Sony has been able to expand its customer base and improve its product performance, which has led to strong demand for EV manufacturing in China as well as a shift towards higher pixel count sensors.
Hayakawa also mentioned strategic initiatives such as the collaboration with Kadokawawhich has made Sony the largest shareholder in Kadokawa. The aim is to combine the strengths of both companies to create new value in various entertainment fields.
In the subsequent question and answer session various topics were discussed:
Totoki's role as CEO: Totoki expressed his vision for Sony in the next 10 years and how he wants to utilize the diversity of human resources and business fields to create something new. He wants to be guided by the vision and create something completely new by bringing together different areas.
Challenges and investments: The challenges Sony still faces to be globally competitive were discussed. Totoki explained that Sony has not yet reached the highest level in terms of size and profitability compared to top global players. The company's investment policy under the medium-term plan was also discussed.
Investment plans: The company highlighted the acquisition of EMI Music Publishing in 2018 as the most impressive investment. Totoki commented on the criteria for restructuring and divestments and emphasized that such decisions are made without hesitation if a business unit is not performing well and needs a change.
Duties: Strategies to minimize the impact of US tariffs were discussed, including diversification of supply chains and warehousing. Totoki assured that Sony is making preparations but has not yet made any drastic changes.
Medium-term outlook: Profit sustainability and expectations for the new management team and the capital market were discussed. In the gaming sector, the continuous increase in MAUs and the importance of network services play an important role.
Sony is and remains an exciting company. Unfortunately, nothing was reported on the development of its own e-car. I had hoped that Sony would have similar success to Xiaomi ($1810) (+2.88%) could celebrate. After all, PS5 sales are strong and a growth driver for the company as a whole.
I hope this summary has helped you.
Stay tuned!
