Sony Group Corporation

FY2025 performance: record profitability despite some one-offs - Sales (continuing operations): JPY 12,796bn (+4% YoY) → record high - Operating income: JPY 1,447.5bn (+13% YoY) → record high - Net income: JPY 1,039bn (-3% YoY) mainly due to no prior-year tax benefit (subsidiary dissolution); also impacted by impairments and restructuring-related items elsewhere. - Notable negative/one-off items vs Feb forecast: about JPY 190bn of items not in the earlier forecast, including impairments (Bungie fixed assets; Pixel models) and losses tied to Sony Honda Mobility’s EV model discontinuation/downsizing.

FY2026 consolidated outlook (management forecast): strong operating momentum, cash flow improving - Sales: JPY 12,300bn - Operating income: JPY 1,600bn (growth vs FY2025) - Net income: JPY 1,160bn - Operating cash flow: JPY 1,500bn - Management explicitly frames FY2026 as: profit should improve across most segments even with added JV execution costs and memory-price uncertainty, supported by resilience and prior cost actions.

Segment-level expectations: PlayStation steady/profit resilient; I&SS improving but cautious; Pictures muted by VFX exit - G&NS (PlayStation): - FY2025: Sales ~flat (JPY 4,685.7bn); Operating income +12% YoY to JPY 463.3bn (record), despite Bungie impairment (one-time ~JPY 138.4bn). - Platform health (surprising “good”): 125m monthly active accounts in March (+1% YoY); PS5 install base >93m units. - FY2026 forecast: Sales JPY 4,420bn; Operating income JPY 600bn. Profit roughly flat YoY on an adjusted basis because next-gen platform investments are higher; otherwise expects steady double-digit profit growth in core business. - Music: - FY2025: Sales +15% YoY to JPY 2,120.1bn; Operating income +25% YoY to JPY 447bn (record) (includes onetime items such as Peanuts equity revaluation). - FY2026 forecast: Sales JPY 2,140bn; Operating income JPY 400bn. Key headwind: no Demon Slayer Infinity Castle film hit; offsetting factors include continued streaming growth and other catalog momentum (e.g., Michael biopic driving streams). - Pictures: - FY2026 forecast: Sales JPY 1,630bn; Operating income JPY 145bn. - Opportunity: franchise-building via IP adaptations (e.g., Bloodborne, Helldivers adaptations; Spider-Man: Brand New Day planned July 2026; Jumanji: Open World December 2026). - But structural headwind/“bad”: Sony is winding down Pixomondo VFX and recorded impairments/shutdown costs related to the VFX/virtual production business (reflected in FY2025 performance). - I&SS (Imaging & Sensing Solutions): - FY2025: Sales +20% YoY to JPY 2,051.5bn; Operating income +37% YoY to JPY 357.3bn (record) even after restructuring/impairments. - FY2026 forecast: Sales JPY 2,070bn (slight YoY caution) and Operating income JPY 400bn. - Management is cautious on sensor market growth and expects memory-price uncertainty to persist—especially affecting lower-end smartphone demand. - Major opportunity: MoU with TSMC for a next-gen image-sensor JV (Sony majority/controlling shareholder) to pursue a fab-light strategy and reduce capex burden / capex intensity over time.