Sony decreases forecasts amidst tariffs and delay of games

Key Points

• Sony forecasts FY2026 operating income of ¥1.28 trillion, flat year-on-year and below analysts’ ¥1.5 trillion estimate, blaming about ¥100 billion (US$700 million) in U.S. tariffs.
• To bolster shareholder returns, Sony will spin off its financial division and conduct up to ¥250 billion in share buybacks.
• Despite a Q4 operating profit of ¥203.7 billion, PS5 sales dipped to 18.5 million units as competition from Nintendo’s Switch 2 and the delayed GTA VI loom.
• New CEO Hiroki Totoki faces geopolitical risks, including potential U.S. movie tariffs that could pressure Sony’s entertainment and sensor businesses.

With new U.S. tariffs threatening to reverse gains and harm its outlook for operating profit, Sony Group Corp. has forecast a sluggish year ahead. For the fiscal year ending March 2026, the Tokyo-based tech and entertainment behemoth anticipates ¥1.28 trillion ($8.2 billion) in operating income, which is not only below analyst projections but also essentially unchanged from the year before.

Sony forecasts a sluggish year

The expected ¥100 billion (approximately $700 million) in costs associated with U.S. import duties, which have grown increasingly problematic in the current trade environment, are a significant setback. Sony’s estimate falls short of analysts’ consensus of ¥1.5 trillion, even without the impact of tariffs. Sony also announced that it will spin off its financial division and unveiled a plan to buy back up to ¥250 billion worth of stock in an effort to reassure investors. Sony will start reporting this unit as a discontinued operation this quarter, and the listing is set for September 29.

Following the announcement, Sony shares increased by as much as 4.5%, despite the cautious prediction. In response to investor demands for greater capital efficiency and higher shareholder returns, Japanese businesses have progressively adopted share repurchase programs. Sony exceeded market expectations by reporting an operating profit of ¥203.7 billion for the quarter that ended in March. Over the fiscal year, the company sold 18.5 million PlayStation 5 consoles, a minor decrease from the 20.8 million sold the year before.

Pressure on leadership

Hiroki Totoki, Sony’s recently appointed CEO, is under immediate pressure to guide the company through a volatile global market. The biggest market for Sony’s PlayStation 5 systems, which are made in China, is still the US. Sony recently raised the price of the PS5 in Europe, Australia, and New Zealand, but it’s unclear if the U.S. will follow suit if tariffs continue.

Price hikes may further stall the five-year-old console’s growth, as Nintendo’s upcoming Switch 2, set to launch in June, already challenges its market position. The delayed release of Grand Theft Auto VI, a key title expected to drive console upgrades, has added to the difficulty.

Uncertainty also surrounds Sony’s image sensor business outside of gaming. The US still accounts for the largest share of PlayStation 5 sales, with Sony manufacturing the systems in China.To make matters worse, former President Donald Trump has alluded to imposing tariffs on foreign-produced movies, which could jeopardize Sony’s efforts to expand its anime franchises, such as the Demon Slayer series, internationally.

Sony is navigating not only financial markets but also shifting geopolitical winds that could reshape its strategic priorities as a result of the escalating global trade tensions.

Featured Image Credit: Garrett Morrow; Pexels: Thank You!

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