Japanese platform holder Sony has confirmed that the cost of launching its next-gen PlayStation 3 console has contributed to a 68 per cent drop in its profits for the year ending March 31st.

Operating profits reached €438.3 million, down from the previous year’s figure of €1.38 billion. Sales for the period, however, climbed by 10.5 per cent, whilst net profit reached €773.4 million, an increase of over two per cent.

Quarterly data showed Sony’s largest net loss in four years, totalling €413 million. The biggest losses were seen in the company’s gaming division – a stat Sony partly attributed to the discrepancy between the manufacturing cost and sale price of PS3.

On the flip side, however, PSP helped to balance out the PS3 losses as its manufacturing costs continue to decline.

A company statement claimed: "A significant reduction in operating loss is expected due to rapid reductions in hardware production costs and an enhanced line-up of software titles for PS3.”

Sony predicts that the year ahead will bring a reversal of fortunes, however. It expects operating profits of €2.6 billion for the next financial year, a figure that would represent a five-fold increase over last year’s results.