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TOKYO, May 18 (Reuters) – Sony Group Inc. (6758.T) It said on Thursday it was considering a partial spin-off of its finance business after three years of full control as the group doubled down on bets on entertainment and image sensors.
Sony said it was considering spinning off Sony Financial Group — whose businesses include life insurance and banking — within two to three years, with an eye toward taking the business public and retaining a stake of just under 20%.
Given the amount of money needed for the business, “balancing that money with our investments in other growth areas such as entertainment and image sensors is a challenge,” Sony Chief Financial Officer Hiroki Totoki said at a strategy briefing.
The group is seeking synergies among its business lines, which include video games, music and films. It said the hit show “The Last of Us” on television network HBO drove the popularity of the game franchise it’s based on and the music it uses.
Changes in tax rules made possible a partial spin-off of Sony Financial, which would allow the newly listed business to retain the Sony brand, the group said.
“In terms of Sony’s outlook, this doesn’t change anything significantly, but it does make it a more pure gaming entertainment company that the market generally likes,” said Mio Kato, an analyst at LightStream Research, writing in Smartkarma.
Financial business revenue fell 5% to 1.45 trillion yen ($10.74 billion) in the fiscal year ended in March. Operating profit rose 49 percent to 223.9 billion yen, helped by a one-time gain on property sales.
For the current fiscal year, Sony expects the unit’s revenue to fall 40% due to accounting changes, and profits to fall 20% due to the absence of a one-time gain from the previous year.
Sony shares rose 6 percent in Tokyo trading a day after the group said it would buy back up to 2.03 percent of its shares.
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Sony has said it expects to sell 25 million PlayStation 5 consoles this fiscal year as supply chain issues ease. This will be a record for any PlayStation device.
However, it also forecast a decline in first-party software sales, reflecting weakness in the gaming pipeline.
The sequel to Sony’s hit “Marvel’s Spider-Man” is one of the games set to release this year.
rival nintendo ltd. (7974.T)Its Switch console has more than 125 million installed base, and The Legend of Zelda: Tears of the Kingdom sold more than 10 million copies in its first three days after release.
It also received a monster hit With “Super Mario Bros. Movie”.
Sony Chief Executive Kenichiro Yoshida said he saw the movie and played Super Mario in Tokyo recently.
“Likable characters and intellectual property (IP) can exist for 30, 50 or 100 years,” he said.
“This is something we want to invest in for sustainable growth,” Yoshida said.
($1 = 135.0500 yen)
Reporting by Mariko Katsumura; Editing by Jacqueline Wong
Our standards: Thomson Reuters Trust Principles.
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