Sony Forecasts Flat Profit as Trump Tariffs Bite, Bets on Entertainment for Growth

Sony said on Wednesday it expects operating profit to rise a modest 0.3% to 1.28 trillion yen ($8.7 billion) for the financial year ending March 2026, factoring in a 100 billion yen ($680 million) hit from U.S. tariffs imposed under President Donald Trump’s ongoing trade war.

The profit guidance does not yet reflect the potential easing effects of this week’s U.S.-China trade deal, and executives noted that the final tariff impact could vary significantly depending on trade policy developments.

Despite the caution, Sony’s shares rose 3.7%, buoyed by solid results and the announcement of a 250 billion yen ($1.7 billion) share buyback program.

🧾 Key Financial Highlights

• FY2025 profit forecast: 1.28 trillion yen (+0.3% YoY), factoring in tariff impact

• FY2024 actual profit (incl. financial services): 1.4 trillion yen (+16% YoY)

• Buyback plan: 100 million shares, worth up to 250 billion yen

💼 Strategy & Structural Changes

Sony, once best known for its electronics, is doubling down on entertainment under new CEO Hiroki Totoki, who took the helm in April:

• Preparing a partial spin-off of Sony Financial Holdings, leaving Sony with <20% stake

• Scheduled listing of the financial unit in Tokyo on September 29

• Focus on entertainment resilience, citing performance during COVID-19

“We have seen the resilience of entertainment businesses during economic downturns,” said Totoki.

🎮 Gaming & PS5 Outlook

Sony’s gaming business saw a 12.5% drop in operating profit, with PlayStation 5 (PS5) sales falling 38% YoY in Q1 to 2.8 million units.

Despite this, Sony expects 16% profit growth in gaming this year, driven by:

• Increased first-party game sales

• Expected 15 million PS5 units sold in FY2025

• Launch of “Ghost of Yotei” in October

• Anticipation for “Grand Theft Auto VI”, though its release was delayed to 2026

CFO Lin Tao emphasized flexibility in PS5 shipments, citing “many uncertainties.”

Sony also:

• Raised PS5 prices in Europe and UK due to inflation and FX fluctuations

• Stockpiled inventory in the U.S. ahead of potential trade disruptions

• Diversified hardware production to offset geographic risks

📉 External Challenges

• Tariff impact adds a 100B yen drag on forecast

• Trade uncertainty and currency volatility pose ongoing risk

• Competition with Nintendo’s Switch 2, launching June 5 with a 15M unit sales target

With the tariff situation in flux, Sony’s balanced approach — doubling down on entertainment, gaming IP, and hardware flexibility — may be key to navigating what could be a volatile fiscal year.