Sony forecast operating profit of half a trillion yen for its 2018 financial year on Friday, pencilling in the highest level in two decades on expectations of improvement at its semiconductors and pictures segments.

The company forecast operating profit of ¥500bn ($4.5bn) for the year ended March 31, 2018, with outlook for net income set at ¥255bn based on an assumed foreign exchange rates of ¥108.4 per dollar and ¥118.8 per euro.

It said operating income was “expected to significantly increase year-on-year due to an expected improvement in the operating results primarily in the Semiconductors and Pictures segments, partially offset by an expected negative impact of foreign exchange rates.” Sales and operating revenue are expected to increase 8 per cent to ¥820bn in FY18 primarily thanks to improvements at its games, semiconductor and pictures segments.

Sales and operating revenue for the fiscal year ended March 31, 2017 fell 6.2 per cent year on year to ¥7.603tn, basically in line with a median estimate of ¥7.604tn from analysts surveyed by Bloomberg. Operating profit fell 1.9 per cent to ¥288.7bn, besting a forecast of ¥283.7bn and bringing earnings per share to ¥58.07, comfortably above expectations of ¥55.29.

The company attributed the drop of ¥5.5bn in operating income in part to a $962m writedown at its movie business, but noted this was partially offset by improvement at its mobile communications segment and rising operating income at its game and network services segment.

The company’s mobile communications segment managed to swing from an operating loss of ¥61.4bn in 2016 to income of ¥10.2bn last year thanks to a reduction in operating costs and narrower focus that emphasised higher value-added models – as well as a ¥26.1bn positive impact from foreign exchange rates.

Operating income at its games division rose 52.9 per cent to ¥135.6bn thanks largely to an increase in PlayStation 4 software sales and cost reduction for the console’s hardware, though those were partly offset by a ¥2.2bn negative impact from exchange rate shifts and a price cut for said console.

Sales at the company’s semiconductor segment climbed 4.6 per cent to ¥773.1bn, but swung to an operating loss of ¥7.8bn thanks to a negative foreign exchange impact of ¥43.7bn and the lingering impact of the 2016 Kumamoto earthquakes.

Sony forecast a swing back to operating profit of ¥120bn in the financial year ended March 31 at its semiconductor segment. Game and network services are expected to bring in ¥170bn, while operating profit at Sony Pictures is forecast to come in at ¥120bn.

Shares in the company had closed the afternoon session down 0.1 per cent at ¥3,759 ahead of Friday’s earnings announcement. The company had raised its forecast for operating income in the 2017 financial year by nearly 19 per cent last week.

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