SONY Earnings: Sony Beats Q4 Profit, Guidance Suffers $700M Hit from Trump’s Tariffs

Japanese entertainment conglomerate Sony Group (SONY) (JP:6758) reported solid results for the fourth quarter of fiscal 2024, ending March 31, 2025. However, the company warned of a 100 billion yen ($700 million) hit from President Donald Trump’s tariffs in the upcoming fiscal year.

Sony posted a 4.6% year-over-year growth in net profits to 197.73 billion yen ($1.34 billion), surpassing the consensus of 145 billion yen. Also, operating income of 203.65 billion yen beat the consensus of 158.75 billion yen. On the other hand, net sales of 2.63 trillion yen fell 24% year-over-year and also missed the consensus of 3.03 trillion yen.

The chart below displays Sony’s segmental revenue breakup over the past three years as presented by Main Street Data.

Sony’s Forecast Clouded by Trump’s Tariffs

Unfortunately, Sony’s forecast appears cautious, with the company preparing to take a hit from Trump’s trade war. Net profit for Fiscal 2025 is projected at 930 billion yen, much below analysts’ estimates of 1.15 trillion yen. Similarly, Sony’s net sales’ projection of 11.70 trillion yen fell short of analysts’ expectations of 13.29 trillion yen. Meanwhile, operating profit is expected to remain nearly flat at 1.28 trillion yen compared to FY24.

Sony has been increasing prices of its products where possible to mitigate the impact of tariffs. Last month, the video game maker raised prices of its PlayStation 5 consoles in Europe, Australia, and New Zealand, attributing the hikes to inflation and exchange rate fluctuations. In Q4FY24, Sony sold only 18.5 million PlayStation 5 consoles, compared to 20.8 million sold in the prior year period. Looking ahead, Sony expects its gaming business to report a 16% jump in profit, backed by higher sales of first-party games.

The U.S. is one of the biggest markets for the PlayStation consoles but a majority of them are manufactured in China. Sony could hike prices in the U.S. too, if the tariffs take full effect. Moreover, Sony’s image sensors, used in smartphones, and its movie productions could also be impacted by tariffs if Trump decides to impose strict taxes on handsets and movies made outside U.S.

Sony’s Restructuring Takes Shape

Notably, Sony announced a partial spin-off of its financial unit, Sony Financial Group Inc. (SFGI), as part of its strategic shift to focus more on its music, games, and movies businesses. Post the partial divestment, Sony Group will hold a less than 20% stake in the finance unit. The transaction is expected to take effect on September 29, via a listing of SFGI shares on the Tokyo Stock Exchange.

In lieu of the spin-off, Sony Group will distribute 80% of SFGI’s stake to its existing shareholders in the form of a stock dividend, on a one-for-one basis. Sony also announced a stock buyback plan of up to 250 billion yen. Sony shares are trending up 2.3% on the Tokyo stock exchange at the time of writing, majorly because of the spin-off and stock buyback news.

Is SONY Stock a Good Buy Now?

On TipRanks, SONY stock has a Moderate Buy consensus rating based on two Buys and one Hold rating. The average Sony price target of $33 implies 34.5% upside potential from current levels. Year-to-date, SONY stock has gained nearly 16%.

Please note, these ratings could change after analysts review their stock recommendations post today’s earnings announcement.

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