(Bloomberg) -- Sony Group Corp. offered an underwhelming forecast for the year ahead, with the burden of US tariffs wiping out expectations for an increase in operating profit.

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The entertainment-focused group said on Wednesday that it sees a ¥100 billion ($700 million) impact from US levies in the year to March and expects an operating profit of ¥1.28 trillion. Even without the tariffs, Sony’s projection falls shy of the average analyst estimate of ¥1.5 trillion and is essentially flat compared to the year concluded in March 2025.

The new outlook came alongside the announcement of a share buyback of as much as ¥250 billion and the timeline for a partial spinoff of Sony’s financial unit. Sony said it plans to list the financial operation on Sept. 29 and will start to treat it as a discontinued business in its accounting from the current quarter.

Shares of Sony extended their gains, rising as much as 4.5% after the report. Buybacks are soaring in Japan as companies that have been hoarding cash for years come under increasing pressure to lift capital efficiency and boost shareholder returns.

Over the first three months of this year, Sony reported better-than-expected operating income of ¥203.7 billion. The company sold 18.5 million PlayStation 5 consoles in the year to March, following 20.8 million in the year earlier.

Sony’s new Chief Executive Officer Hiroki Totoki’s first task is to navigate the entertainment group though a new era of a tariffs-wielding US. The US comprises the bulk of PlayStation 5 sales, which is mostly produced in China. Sony raised the console’s price in Europe, Australia and New Zealand last month, leaving questions about possible price hikes in the US should tariffs become a constant.

Higher prices would slow momentum of the five-year-old hardware, especially as it vies with rival Nintendo Co.’s Switch 2, which launches in June. The postponement of Rockstar Games Inc.’s much-awaited Grand Theft Auto VI is also weighing on PlayStation sales in the current fiscal year.

“The delay in GTA VI is a real blow to the PS5,” said David Cole, chief executive officer of US-based digital entertainment research firm DFC Intelligence. “This was supposed to be the product that got many consumers to get off the PS4 and on to a PS5.”

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Sony’s other operations are also under siege. The outlook for image sensors, used in smartphones by everyone from Apple Inc. to Xiaomi Corp., is murky, with tariffs hitting handsets in the US. And President Donald Trump has suggested tariffs may also be placed on movies made outside the US, just as Sony is promoting Japanese animated films such as the Demon Slayer series overseas.

(Updates with share reaction.)

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