TOKYO, May 14 (Reuters) - Japan's Sony Group reported a 7% fall in annual operating profit on Tuesday, hit by the performance of its financial business.

Profit for the year ended March was 1.2 trillion yen ($7.67 billion), in line with an average estimate from 23 analysts polled by LSEG.

Sony said it sold 20.8 million PlayStation 5 units in the full year. That compared with a revised target of 21 million units issued in February following weaker-than-expected sales over the year-end shopping season.

The gaming sector has been hit by a slowdown with Xbox maker Microsoft last week moving to shutter studios including Tokyo-based Tango Gameworks in the latest cost-cutting measures.

Sony said in February it would lay off 900 workers at its gaming business and shutter a London studio.

Known as the inventor of the Walkman and the MiniDisc, Sony has transformed from an electronics manufacturer into an entertainment and technology juggernaut spanning movies, music and games and chips.

The Japanese tech conglomerate plans a partial spin-off of its financial unit with a listing in October 2025 in order to focus on its entertainment and chips units.

Sony Pictures last week sent a letter expressing interest in acquiring Paramount with private equity firm Apollo , Reuters reported.

A deal would create a formidable Hollywood studio with a share of around 20% of the North American box office.

($1 = 156.4200 yen) (Reporting by Sam Nussey; Editing by Subhranshu Sahu)