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By Bloomberg

Sony Corp. forecast a surge in operating earnings by fiscal 2017 as Chief Executive Officer Kazuo Hirai drives the company’s turnaround with games, image sensors and entertainment.

Operating profit will reach 500 billion yen ($4.2 billion) in the year starting April 2017, the Tokyo-based company said Wednesday. That compares with its forecast for 20 billion yen in operating profit this year. Sony is also targeting a boost in its return-on-equity to above 10 percent.

Sony raised its annual operating profit forecast this month as demand for image sensors and PlayStation 4 consoles combine with lower costs to revive growth. Hirai is directing the turnaround as Chief Financial Officer Kenichiro Yoshida restructures operations to restore credibility with investors at a company that lowered its earnings outlook 15 times in the past seven years.

“A feeling of trust is growing as they are steadily doing what they say, and the market respects it,” Yasuaki Kogure, chief investment officer at SBI Asset Management Co. in Tokyo, said before the announcement. “Hirai’s reform is bearing fruits in the fields, such as image censors, that Sony focuses on.”

Sony shares closed at 3,174.5 yen before the announcement. The stock has surged 28 percent this year, compared with a 5.3 percent rise in the benchmark Topix index.

The company said it wants return-on-equity to become its primary performance indicator. Sony hasn’t had an annual return on equity above 10 percent since posting 10.8 percent in the 12 months ended March 2008, according to data compiled by Bloomberg.

Xperia Phones

Sony this month forecast an annual operating profit of 20 billion yen, compared with an earlier projection for a 40 billion-yen loss.

The devices unit supplies the image sensors that power cameras built into its Xperia smartphones and Apple Inc.’s iPhones. Hirai is boosting investment in the chip unit to build more modules for phones, tablet computers and automobiles.

Sony last year sold its Vaio personal computer division and put TV manufacturing into a new structure as Hirai tries to end losses at the business.

The company’s video and sound businesses will be put in a separate structure from October, it said.