Business News

Sony expects 73.2 percent annual profit jump near a level it hasn't seen since 1998

Kazuo Hirai, CEO of Sony.
Justin Solomon | CNBC

Sony Corp said on Friday it expects annual operating profit to surge 73.2 percent, closing in on a two decade-old record, as its cash-cow image sensor business recovers from quake damage and enjoys strong demand from smartphone vendors.

Sony forecast profit to reach 500 billion yen ($4.50 billion) in the financial year through March 2018 from 288.7 billion yen a year prior, when earnings were roughly in line with a revised estimate announced earlier this month.

The outlook compared with the 510.58 billion yen average of 27 analyst estimates compiled by Thomson Reuters.

If achieved, profit would be at its highest since peaking at 525.7 billion in the year through March 1998, when strong consumer electronics sales combined with the popularity of the first PlayStation console and box-office hit "Man in Black".

Profit is nearing that of Sony's golden era after a massive overhaul under Chief Executive Officer Kazuo Hirai, including exiting the laptop business and downsizing television set operations.

Image sensors are now likely to be the biggest contributor to the profit growth, as operations at a factory damaged by earthquakes a year ago have returned to normal at a time when smartphone vendors are increasingly adopting dual-lens rear cameras in their handsets, requiring extra sensors.

Sony forecast its chip division, which includes image sensors, to book an operating profit of 120 billion yen, compared with the previous year's loss of 7.8 billion yen.

The firm expects profit in the gaming business - another growth-driver - to expand 25.4 percent. It anticipates a slight decline in sales of PlayStation 4 consoles but expects to benefit from online businesses.

Sony expects its pictures segment - which it has said is in need of restructuring - to return to profit after a $1 billion writedown in the previous year.