Sony sees $700 million tariff hit on underwhelming outlook

Sony Group Corp. offered an underwhelming forecast for the year ahead, with the burden of US tariffs wiping out expectations for an increase in operating profit. 

The entertainment-focused group said on Wednesday that it sees a ¥100 billion ($700 million) impact from US levies in the year to March and expects an operating profit of ¥1.28 trillion. Even without the tariffs, Sony’s projection fell shy of the average analyst estimate of ¥1.5 trillion and is essentially flat compared to the year concluded in March 2025.

The new outlook came alongside the announcement of a share buyback of as much as ¥250 billion and the timeline for a partial spinoff of Sony’s financial unit. Sony said it plans to list the financial operation on Sept. 29 and will start to treat it as a discontinued business in its accounting from the current quarter.

Shares of Sony rose 3.7% in Tokyo on Wednesday. Buybacks are soaring in Japan as companies that had been hoarding cash for years come under increasing pressure to lift capital efficiency and boost shareholder returns.

Sony expects to sell 15 million PlayStation 5 consoles in the year to March 2026, following 18.5 million units in the preceding period. The company reported better-than-expected operating income of ¥203.7 billion for the first three months of this year.

“Our internal outlook — or rather, the image we have in mind — is around 15 million units shipped,” Chief Financial Officer Lin Tao said in a call after the earnings release. “There are currently many uncertainties, such as tariffs and other external factors. So instead of just chasing numbers, we want to flexibly adjust our shipments while keeping an eye on profitability and the overall market.”

Sony’s new Chief Executive Officer Hiroki Totoki’s first task is to navigate the entertainment group though this new era of a tariffs-wielding US. North America comprises the bulk of PlayStation 5 sales, which is mostly produced in China. Tao said Sony will diversify the production locations of the PS5 and may consider raising prices as an option to deal with the impact from tariffs. The company raised its flagship console’s price in Europe, Australia and New Zealand last month.

Higher prices would slow momentum of the five-year-old hardware, especially as it vies with rival Nintendo Co.’s Switch 2, which launches in June. The postponement of Rockstar Games Inc.’s much-awaited Grand Theft Auto VI is also weighing on PlayStation sales in the current fiscal year.

“The delay in GTA VI is a real blow to the PS5,” said David Cole, chief executive officer of US-based digital entertainment research firm DFC Intelligence. “This was supposed to be the product that got many consumers to get off the PS4 and on to a PS5.”

Sony’s other operations are also under siege. The outlook for image sensors, used in smartphones by everyone from Apple Inc. to Xiaomi Corp., is murky, with tariffs hitting handsets in the US. And President Donald Trump has suggested tariffs may also be placed on movies made outside the US, just as Sony is promoting Japanese animated films such as the Demon Slayer series overseas.

Profit at the company’s image sensing operations was flat in the March quarter on a less than 3% rise in sales. Totoki said he expects the mobile image sensor business to grow for years. 

Sony is considering a spin off of the semiconductor unit in a bid to streamline its structure as it focuses more on its entertainment operations, Bloomberg reported earlier.