Sony Group (6758.T) shares surged 12% during early Tokyo trading on Wednesday following the company’s announcement of plans to enhance shareholder returns and project a higher annual profit, boosted by its image sensors business.
The technology and entertainment conglomerate revealed intentions to allocate up to 250 billion yen ($1.6 billion) for a share buyback and gradually increase dividends, targeting a 40% total payout ratio by the fiscal year ending March 2027. Last year’s payout ratio stood at 32%. Overall, Sony plans to earmark 1.8 trillion yen over the next three years for growth investments and share repurchases. Additionally, it will implement a five-for-one stock split to broaden its investor base.
Although concerns over the games business outlook and the potential financial implications of a bid for Paramount Global (PARA.O) had previously dampened investor sentiment, Wednesday’s gains have effectively neutralized the shares’ performance for the year thus far.
Sony is reportedly reconsidering its bid for the U.S. media company, with the possibility of forming a consortium with Apollo Global Management (APO.N), according to Reuters. Analysts like Atul Goyal from Jefferies expressed skepticism about the value addition of acquiring Paramount, citing Disney’s acquisition of Fox as a cautionary tale.
Sony anticipates a decline in PlayStation 5 sales to 18 million units in the current fiscal year, after narrowly missing its revised target of 21 million units in the previous year. The restructuring of the games business management aims to streamline operations, with executives overseeing both technology and content sides now reporting to group president Hiroki Totoki. Sony believes that optimizing user engagement and controlling costs can bolster profits in the games unit, which achieved an operating profit margin of 6.8% last year.
