By Kosaku Narioka


Sony Group projected double-digit earnings growth for the new fiscal year, signaling resilience in its entertainment businesses despite fourth-quarter net profit falling sharply due to losses from its electric-vehicle joint venture with Honda Motor and weakness in its game and other businesses.

The solid profit forecast comes as the Japanese company has spent billions of dollars on acquisitions in recent years to beef up its entertainment content--and has relinquished control of businesses in other areas. Just months after spinning off its financial business to focus on its entertainment businesses, Sony roughly doubled its stake in the company that owns the Snoopy, Charlie Brown and other Peanuts characters, to 80% for about $460 million.

Yet the pivot hasn't come without its challenges. On Friday, the company booked an equity-method investment loss of 44.9 billion yen, equivalent to $286.1 million, related to the Honda venture that recently canceled EV developments, setting back Sony's efforts to deliver entertainment in cars.

The Japanese entertainment and electronics company has also moved quickly in other areas. It plans to form a joint venture with Taiwan's TSMC, seeking the world's largest contract chip maker's manufacturing expertise to develop and produce next-generation image sensors.

Sony aims to limit capital expenditure with the move as it prepares for greater demand for "eyes" for machines in the age of artificial intelligence. The company expects to be the majority and controlling shareholder of the venture.

Chief Executive Hiroki Totoki said that Sony's ability to supply image sensors has been limited to its manufacturing capacity. "Sensors are expected to play a big role in physical AI," he said. "We want to be ready for this future demand."

The company is also planning to buy back up to Y500 billion of its own shares over the next year.

The stock briefly rose after the guidance and buyback announcements before reversing course. Shares have declined 23% year to date, hit by concerns about higher costs of memory chips used in game consoles. Worries that consumers will spend more time with generative AI tools rather than playing videogames or watching movies have also weighed on the stock.

Sony on Friday said it expects net profit for the year that began in April to climb 12.5% to Y1.160 trillion, though it projected revenue to decline 1.4% to Y12.300 trillion.

It forecast operating profit for its game business to increase 30% to Y600 billion, driven by stronger sales of in-house game software titles.

For the three months ended March, Sony's net profit dropped 63% from a year earlier to Y83.12 billion, missing the Y202.24 billion estimate in a poll of analysts by data provider S&P Global Market Intelligence.

Operating profit for its game business fell 42% to Y54.10 billion as revenue declined. Sony sold 1.5 million PlayStation 5 units in the first three months of 2026, down from 2.8 million in the year-earlier period.

Fourth-quarter operating profit for its movie and image-sensor businesses fell. Its entertainment technology business posted a narrower operating loss. Quarterly revenue grew 8.3% to Y3.036 trillion.


Write to Kosaku Narioka at kosaku.narioka@wsj.com


(END) Dow Jones Newswires

05-08-26 0816ET