Sony has said it will spin off its video-and-audio business into a separate company as part of a three-year plan to return to profit.

The loss making Japanese electronics giant firm plans to achieve an operating profit of 500bn yen (£2.17bn) by March 2018.

Sony added it would shrink its head office as part of the restructuring.

The firm has forecast a loss of 170bn yen in the year to March compared with a 40bn yen loss last year.

Last September, Sony issued its sixth profit warning in two years saying it expected losses of 230bn yen, more than four times its original forecast of losses of 50bn yen for the year.

It also said it would not pay a year-end dividend for the first time.

On Wednesday, Sony chief executive Kazuo Hirai said the company must not be afraid to change if it hoped “to grow in a Sony-like way”.

He said the Japanese electronics firm would no longer pursue sales growth in areas such as smartphones where its has suffered competition from rivals Apple and Samsung.

Mr Hirai said instead it would focus on profitable businesses areas, including entertainment operations such as TV programming and the PlayStation game business.

The video-and-sound unit will be spun off by October, he added.

Sony hack

Other parts of Sony may also be spun off, Mr Hirai said, with the computer chips and batteries divisions likely candidates, but details had yet to be decided.

He added he could not “rule out considering an exit strategy”, from Sony’s TV and mobile phone units in the company’s clearest statement to date about the possibility of selling or finding partners for the struggling units.

Sony said it still sees its film division as a growth area despite the cyberattack it suffered in December, which saw emails from Sony Pictures executives leaked online.

The cyberattack came as Sony Pictures prepared to release its move “The Interview”, which involves a fictional plot to kill the North Korean leader Kim Jong-un

Sony has struggled in recent years as it fell behind in fast-growing areas such as smartphones and flat-screen TVs. Sales of blu-ray DVDs have also declined with the growth of online movie streaming services, such as Netflix.

Splitting out divisions would help to make the company more nimble, making each operation more accountable for results, Mr Hirai said.

Sony spun off its TV unit last year and exited the personal computer business.