Today, Sony Corporation released its financial results for the second quarter of fiscal year 2017, which relates to the period between July 1st and September 30th.
As usual, we get an update on PS4 shipments. Sony Interactive Entertainment sent to retailers 4.2 million units during the quarter, which brings the total to 67.5 million units shipped in the console’s lifetime.
A specific breakdown was also provided for the results of the Game & Network Services segment, which is basically PlayStation and PlayStation Network combined.
We see an increase across the board for both revenue and operating income thanks to PS4 software, hardware, and PlayStation Network sales.
Sales increased 35.4% year-on-year (a 25% increase on a constant currency basis) to 433.2 billion yen. This significant increase was primarily due to an increase in PlayStation®4 (“PS4”) software sales including sales through the network, the impact of foreign exchange rates, as well as an increase in PS4 hardware sales.
Operating income increased 35.8 billion yen year-on-year to 54.8 billion yen. This significant increase was primarily due to the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses. During the current quarter, there was a 3.1 billion yen positive impact from foreign exchange rate fluctuations.
Operating income includes a favorable adjustment of 5.1 billion yen that resulted from the recognition of internal royalties in the current quarter, rather than in the first quarter of the fiscal year ending March 31, 2018. This adjustment resulted from a discrepancy in the timing of when internal royalties were recognized at the relevant subsidiaries within the segment.
As for Sony as a whole, all the figures are in the black, and we also read an explanation for the quarterly performance. The Game business is indicated as a primary factor of a significant improvement year-on-year in both sales and operating income.
Sales and operating revenue (“Sales”) increased by 22.1% compared to the same quarter of the previous fiscal year (“year-on-year”) to 2,062.5 billion yen. This significant increase was primarily due to the impact of foreign exchange rates and an increase in Game & Network Services (“G&NS”) segment sales. On a constant currency basis, sales increased 15%. For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 8.
Operating income increased 158.5 billion yen year-on-year to 204.2 billion yen. This significant increase was mainly due to the improvements of operating results in the Semiconductors and G&NS segments as well as All Other.
Operating income in the same quarter of the previous fiscal year included 9.4 billion yen in inventory write-downs of certain image sensors for mobile products and net charges of 1.2 billion yen in expenses resulting from the earthquakes in the Kumamoto region in 2016 (“the 2016 Kumamoto Earthquakes”), both recorded in the Semiconductors segment, and a 32.8 billion yen impairment charge related to the transfer of the battery business recorded in All Other.
During the current quarter, restructuring charges, net, decreased 31.0 billion yen year-on-year to 1.6 billion yen mainly due to the absence in the current quarter of the above-mentioned impairment charge related to the transfer of the battery business recorded in the same quarter of the previous fiscal year. Restructuring charges are recorded as an operating expense and are included in operating income.
Last, but not least, the press release included the forecast for the full fiscal year 2017. The company predicts to sell 19 million PS4 units before March 31st, 2017, which would bring the grand total to 69 million.
The full-year outlook for the Game & Network segment was increased for sales compared to the one disclosed in August, but was left untouched for operating income. It’s worth mentioning that if Sony Interactive Entertainment manages to achieve the forecasted figures, it’ll mark a very sharp improvement compared to the past fiscal year.
If you want to compare these results with those of the previous quarter, you can check out our dedicated article from August.