Sony ‘obsessed with growth’ as new president appointed

Sony has promoted its chief financial officer Hiroki Totoki to president and chief operating officer, in a move seen as lining him up to be the future head of the entertainment and consumer electronics group.

News of Totoki’s promotion came as the technology conglomerate upgraded its annual guidance on Thursday, forecasting stronger profits for its PlayStation gaming business.

The management reshuffle will take place on April 1, with Totoki, described as “a steady hand” by investors, also remaining as finance chief and working alongside Sony’s current president Kenichiro Yoshida, who will double as chief executive and chair.

Analysts have considered Totoki as the natural successor to Yoshida, with the duo having worked closely together in engineering a turnround at Sony following years of losses in its consumer electronics business.

Totoki will be expanding his role at a time when most of the group’s profits come from content — games, films and music — while the original electronics business accounted for less than 20 per cent of operating profits in its 2021 fiscal year.

The shift towards the media business had begun before Yoshida became president in 2018, but the company has solidified its position as a global entertainment giant and more than doubled its market value since he took over.

Another of Yoshida’s strategic bets has been on electric vehicles, which the company has pursued through a joint venture with Honda. Even if that flops, however, analysts say Sony’s sensor business and in-car software platform can be sold into the global market for EVs.

Totoki indicated at Thursday’s earnings conference that he would maintain Yoshida’s strategic direction while pursuing new drivers of growth.

“I am obsessed with growth. When growth stagnates, you fall into a negative spiral,” he said. “We have defined our company’s purpose with Yoshida’s leadership. My job is to make that a concrete project,” he added.

Yoshida said the company needed to strengthen its management structure and allocate its capital more efficiently as Sony navigates US-China tensions and amid rapid changes in the global tech industry.

He added that his right-hand man’s biggest contribution had been to “support growth investments”, citing how Totoki led the $2.3bn acquisition of EMI Music Publishing in 2018 and aggressive investments in its semiconductor business.

Sony said it expected an operating profit of ¥1.18tn ($9.1bn), up 2 per cent from its forecast in November, for the fiscal year through March. The group cited the recent strengthening in the yen as a boost for its gaming division since it lowers the dollar-denominated costs of manufacturing as well as the prices of raw materials and components purchased in dollars.

For the October to December quarter, its net profit fell 6 per cent from a year earlier to ¥326.8bn, dragged down by its film division. It performed worse than a year ago when the blockbuster movie Spider-Man: No Way Home drove profit.

Quarterly revenue increased 13 per cent as sales of PlayStation 5 consoles grew to 7.1mn for the holiday quarter compared with 3.9mn a year earlier, as chip supply shortages eased. Sony increased its forecast for PS5 sales from 18mn to 19mn for the fiscal year and raised its operating profit guidance for its gaming division by 7 per cent.

Separately on Thursday, Panasonic cut its full-year net profit forecast by 11 per cent from October, blaming a slowdown in the Chinese economy for lower sales of its electronics devices and factory automation business.