Sony considers spinning off financial arm to focus on entertainment, sensors

Sony Group Corporation announced today that it is exploring the possibility of a partial spin-off of its financial business, Sony Financial Group, just three years after obtaining full control. The move comes as the conglomerate focuses on strengthening its entertainment and image sensor sectors. Sony is considering a two to three-year timeline for the spin-off, with plans to list the business while retaining a stake of just under 20%.

Sony CFO Hiroki Totoki explained at a strategy briefing that balancing the capital requirements of the financial business with investments in other growth areas, such as entertainment and image sensors, has been a challenge. The conglomerate is seeking synergies between its various business lines, including video games, music, and movies. The partial spin-off of Sony Financial, enabled by changes in tax regulations, would allow the newly listed business to maintain the Sony brand.

The financial business recorded a 5% decline in revenue, amounting to 1.45 trillion yen (US$10.74 billion) for the year ended in March. However, operating profit increased by 49% to 223.9 billion yen, aided by a one-time gain from a property sale. Sony anticipates a 40% drop in revenue at the unit in the current financial year due to an accounting change and a 20% decrease in profit due to the absence of the previous year’s one-off gains.

In Tokyo morning trade, Sony’s share price rose by 6% following the announcement of the group’s intention to repurchase up to 2.03% of its stock. The company has also revealed plans to sell 25 million PlayStation 5 consoles this financial year as supply chain issues are resolved, potentially setting a new sales record for any PlayStation device. However, the company has also projected a decline in first-party software sales, indicating a weak games pipeline, reports Channel News Asia.

Sony CEO Kenichiro Yoshida emphasised the importance of investing in sustainable growth, stating, “Loveable characters and intellectual property (IP) can live for 30, 50 or 100 years.”