Q1 2021 Sony Corp Earnings Presentation
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I'll be acting as the M.C. My name is cut off from corporate Communications Department.
This briefing is held for the media analysts and institutional investors, who we have notified in advance.
The audio and presentation materials can be viewed on our website.
[noise] today first of all from the executive Deputy President and CFO Hiroki Totoki.
We will give an explanation on consoles <unk> financial results for a flight twin the twin DQ, one and the forecast for F. Why Twentytwenty and then have a question answer session.
It should lost approximately 17 minutes.
But the countries.
Today, I would like to begin by addressing the operating environment surrounding sorry, the spread of the new Corona Vars disease, but increase in geopolitical risks such as the tension between the United States in China and the frequently.
<unk> natural disasters in recent years or just a few things that are fundamentally changing society and economy as full as people, whose values and lifestyles and the verge your base and these changes will not be limited to short term and they are difficult to predict.
They're just saying that it's not the strongest as a species that survives nor the most intelligent, but rather the one most adaptable to change.
Certainly it tends to death, but actually it to the changes in the environment and increase the focus with which we manage each of our businesses. It.
The fiscal year, ending March 31st when you're going to run Opus. Great 20 is an important here, which we are excited we expected both recover from the impact of the spread of cobot 19, and formulate a strategy to address that business environment in the aftermath of the spread of the virus. We tend to improve there was it is.
Sony Group by leveraging our advantage, which is the diversity about personal and business is adapt to changes and convert the crisis into an opportunity now I was explained if only and good.
If it's good trend he first quarter consolidated sales increased 2% compare to the same quarter other previous fiscal year, two until <unk> 968.9 billion yen and it goes you operating income slightly decreased to 228.4 billion yen from the same quarter other previous year, which was a record high income before income to.
Taxes increased 88.9 billion to 319.9 billion yen the partially due to an improvement any unrealized gains on securities investments in other income and expenses net income attributable to Sony Corporation stockholders for the first quarter increased 81.1 billion yen to 233 point.
Three video again, excluding extraordinary items operating income would have been would have increased 2.2 billion yen.
Last year to 225.2 billion yen.
Now this slide shows the results by segment for the Tesco 30 for the first quarter.
At the previous earnings announcement to held in May we were unable to reasonably predict the impact of the spread of corporate 19. So our consolidated results forecast for fiscal Turkey was undetermined today, we're disclosing the consolidated results forecast for physical 20, Casa de fields or X.
Especially to be flat year on year at eight trillion 300 billion yen and operating income is expected decreased 225.5 billion yen to 620 billion yen income before income taxes is expected to be 600 inch by 85 billion yen and net income attributable to sublease stockholders is expected.
The 510 billion yen.
Our forecast for operating cash flow excluding for the financial services segment is 550 billion yen.
Our current forecast for three a cumulative operating cash flow excluding the financial services is upper.
Approximately 2.13 and yet.
We plan to issued 25 years pressure as an interim dividend this fiscal year compared to 20 years, which a in the previous fiscal year.
We have yet to determine how much the annual dividend allowed to be it this year, but our policy is to increase dividends in a steady manner over the long term.
For the fiscal 20 forecast for each of our segments are shown on this side it.
I will explain the details when I talk about each segment. After this but I'd first like to explain the operating loss in corporate and elimination.
In the previous fiscal year, we recorded 31.5 billion yen extraordinary gains well. This year. This fiscal year, we expect to increase expenses will need to long term growth initiatives and societal contributions.
Such as investments across the Sony group to explore and develop new businesses, including artificial intelligence and robotics.
Well as contributions to the global be refund for Cavatt 19, the fiscal 2000 forecast includes an expectation that we will incur 25 billion yen and restructuring costs across the Sony Group. In addition to continuing our efforts to reducing cost we are taking action to adapt quickly to changes in the operating environment.
It brought on by the spread of corporate 19.
I will now explain the situation in each of our business segments first is the GNS segment.
The first quarter fiscal 20 sales increased 32% year on year to six and a 6.1 billion yen and operating income increased 50.2 billion yen to 124 billion yen.
Sales for the fiscal year are expected to increase 26% compared to fiscal 19, two to two years 500 video NAND, mainly due to a significant increase in game software and hardware sales I.
Operating income is expected to be 240 video NAND flat compared to where the kids Tonight gene because the benefit of the increase in sales and an increase in public from Playstation plus are expected to be offset primarily by increasing cost related to introduction attestation five hardware software and networks.
Okay. So this is all benefited in the current quarter from the positive impact of stay at home demand, resulting from the spread of the virus in the software space the.
First of all the titled the that's the best part to where the huge and non first party titles, including free to pay titles contributed significantly.
Cost of Sema, which we released on July 17th sold.
Through 2.4 million units in the first three days since the launch making it the fastest setting in house first party you gave me software IP for the Playstation four.
In the network services area, a area plus plus subscribers have reached about 45 million.
As of the end of June and a time when communication network and Brian It was under pressure that's additional never did not falter, well explain any other issues and is continuing to deliver high quality entertainment experiences.
We aim to continue to enhance and expand user engagement as we approach then on what's your piece five in the Twentytwenty holiday season.
Next is like music segment.
It's ctwenty quoted one sales decreased 12% year on year 277.1 billion yen and operating income decreased 8.4 billion is 34.9 billion yen.
For full year sales are expected to decreased 7% compared to fiscal 19 to 790 billion yen and operating income is expected to decreased 12.3 billion yen to have written 30 billion yen.
We recorded music space revenue in most categories, including Hmm packaged media and advertising supported screening services is being negatively impacted by the state of probably 19 overall streaming revenue only grew 6% year on year on the U.S. dollar basis.
During the quarter.
But audio streaming revenue of which paid streaming account for a large portion grew 17%.
In the music publishing space.
Revenue from all areas, except for streaming such as music licensing some movies and television is being significantly negatively impacted by the state of Toby 19th.
And in a visual media platform space, having you is being significantly impacted due to a variety of factors.
I guess decreasing physical media production and hand, the postponement in cancellation of live events, primarily in Japan and have the hand, you'd beginning to have success initiatives expected to contribute to the financial performance going forward such as the launch of stage count. It paid live video distribution service that serves as a one stop shop for tick.
Net sales of merchandise sales and stage construction and a strong sales of the mobile game at Disney Twisted Wonderland Nexus Pictures.
At this ctwenty quota one sales decreased 6% year on year 275.1 billion yen, primarily due to a decrease in box office revenue in motion Pictures and a decrease in advertising revenue in media networks, but partially offset by an increase in license revenue in television productions.
Operating income increased 24.4 billion yen year on year to 24.7 billion yen due to a significant decrease in marketing expenses in motion pictures.
Primarily due to decreasing theatrical releases, resulting from the state of covered 19, we expect fiscal 20 sales decreased 25% compared to fiscal 19 to 760 billion yen. We expect operating income to be 41 billion yen a decrease of 227.2 billion yen.
Compared to last year, which benefited I found the integration of hit titles.
Although we have resumed filming in some countries.
Let's see environment in motion Pictures intelligent productions is continuing.
If we can restart production, we think we can recover our position in the television production area relatively quickly because demand for content from digital distribution services is extremely high and we think we can leverage our advantage as a major independent studio.
As for theatrical theaters to either closed or admittance is limited and we expect a release counter to be very crowded when they do reopened.
Since the motion pictures generate profit over multiple years, starting with theatrical releases the impact on our financial results of not being able to release them is expected to last two to three years.
Yeah, the hand digital sales of products, we have released theatrically in the past a strong.
For Sony the importance of theatrical releases is not expected to change going forward, but in order to maximize the long term value of our product we will affect the optimal distribution channel for our product is based on the nature scale and timing of the product.
Next is the Ethernet segment.
For this quarter and the sales decreased 31% year on year J.C., We had in 31.8 billion yen, primarily due to a decrease in unit sales of digital cameras in TV.
Operating income decreased a significant 34.2 billion yen year on year, and a 9.1 billion yen operating loss was recorded I due to the impact of the decreasing sales. Despite a reduction in operating costs across the entire segment.
For full year sales are expected to decrease a 6% to one trillion hundred 870 billion yen and operating income is expected decreased 27.3 billion compared to fiscal 19 to 60 billion yen Mobile communications recorded 11 billion yen in operating income.
I'm doing the border and we expect it to generate a profit in the fourth is square.
The even a segment was the segment, which was impacted by the spread of Corbett 19 earlier and more significantly than any other segment, but its supply chain had almost fully recovered and although progress varies depending on a part of category region customer demand is beginning to recover as well we are preparing for potential second and third waves of cover.
19 by transforming the structure of our business into a more resilient one.
Through an overhaul over operations and further streamlining as well as enhancement of our ecommerce distribution channels. This segment, which will inherit their Sony Corporation Tradename on April 1st when you 21 is a further accelerating its efforts unify the management of the business under its umbrella and is committing the evolution of it.
Business by deploying products and services that can enable reality real time in remote activity through our audio video and communications technology.
Next is I end does that's image sensing solutions.
Ctwenty caught a one sales decreased 11% year on year to 206.2 billion yen and operating income decreased 24.1 billion yen to talk to 95.4 billion yen.
It's called 20 sales are expected to decreased 7% to one trillion yen and operating income is expected to decreased 105.6 billion yen to 130 billion yen.
Now I will explain the state of our sensor business.
Fiscal 20 sales of image sensors for mobile products are expected to decrease compared to fiscal 19, primarily due to a decrease in end user product sales by one of our major customers adept deceleration of the smartphone market and assist the midrange moderately priced models in that market, resulting from the impact.
The spread of course, the 19th and significant reduction in component and finished goods inventory by Chinese customer profitability is expected to be impacted by a decrease in gross margins and an increase in depreciation and manufacturing related costs associated with production equipment. We put just in the previous fiscal year when we expect it.
Growth as well as higher research and development costs, we do not expect to grow sales or mobile sensing products compared to fiscal 19, because the adoption by smartphone makers has been slow so and sales of flux. It models, which already use our products have decreased due to the shifting market conditions.
Sales of image sensors to Avi have also decreased due to the construction of the sensor market for digital cameras, resulting from the impact of the spread of called at 19, we expect them off that the contract in one year as much as sweep had previously expected it what contracts over the next approximately three.
Yes.
In order to respond quickly to the challenge changes in the environment, especially for image sensors for mobile products, we will modify our strategy mainly in the areas of investment research and development and customer base.
We have already significantly reduced investment in capacity to supply demand in the fiscal year ending March 31st Twentytwenty too because we can supply that demand by stockpiling strategic inventory through utilization of our excess production capacity city this fiscal year.
The focus of cumulative capital expenditures for the three fiscal years Big on April 1st 2018, which we explained in the past has been reduced 50 billion yen from approximately 700 billion yen to approximately 650 billion yen.
And we are carefully reviewing the timing of planned capital expenditures and Cisco 21 and beyond.
We will review the projects and priorities for research and development spending as well to ensure that they fit with the recent trends in the smartphone market and changes in a major customers needs.
However, in order to maintain and increase our future technological competitive advantage, we will not drastically reduce the number of projects or the budget.
We intend to more proactively expand and diversify our customer base, which were cautious to do previously due to production capacity constraints.
Over the mid to long term, we will look to expand the applications for image sensors and the market overall by introducing assessing products that use sensors equipped what AI processing functionality and we will steadfastly work to grow this business I.
We plan to complete within approximately one year and enhancement of our business model to adapt to the recent changes in the environment and we expect returned the business to the past a profit growth from the second half of fiscal 21.
Lastly, as the financial services segment.
So Scott when the quarter wants an agile services revenue increased 33% year on year to 446.8 billion yen, primarily due to a significant increase in net gains on variable insurance investment in a separate account at Sony life.
Operating income increased 1.1 billion yen year on year to 47.2 billion yen.
Financial services revenue and Cisco Plenti is expected to increase seven per cent compared to fiscal 19 to one trillion 400 billion yen and operating income is expected to increased 12.4 billion to 142 billion yen.
On July 13th we completed our public tender offer for the shows up in US Sony Financial Holdings assets, that's not tell by Sony.
The shares other says H. will be de listed on August 31st.
And at this age will become a wholly owned subsidiary of Sony on September 2nd.
The financial services business managed by SSH has a stable high level of profit.
And is a core business of Sony that plays a role in our long term growth reality.
By eliminating the listed subsidiaries relationship between ethic, and Sony we intend to increase the speed of decision, making enhanced management optionality and further improve the value of the business. In addition by capturing the minority interest and realizing tax benefits, we expect increased Sony's consolidated net income.
By approximately 40 to 50 billion per year going forward.
And that is expected to contribute to increasing earnings per share ideas and return on equity are all week in order to deepen understanding of our financial services business. We are considering what key performance metrics to disclose.
Now I will briefly discuss the minority investments, we made and Billy Billy and epic games this fiscal year.
At a time when digitization of the entertainment industry is accelerating.
We plan to leverage these investments to expand the customer touch points for our diverse array of content I saw this create new digital content and ways of enjoying that content that go beyond our business segments in partnership with these companies going forward, we intend to proactively pursue strategic investment.
Opportunities to explore future growth.
Next I will explain our enhanced segment disclosure.
Historically, Sony has proactively enhanced disclosure of information about our businesses and from this fiscal year, we have decided to disclose on a quarterly basis. The information shown here and the G.N.S. and music segment, which are a particular interest at the capital markets at the same time, we have terminated disclose.
There are certain items and the EPA and that segment.
For more details please see our supplemental information.
Today, we announced the establishment of a facility to repurchase up to 100 billion yen and shows the Sony during this fiscal year like in the past, we use share repurchases as a strategic investments and we'll decide to execute them based upon a comprehensive assessment of a variety of factors.
Including the availability of other investment opportunities, our financial condition and price at which actually has our training we aim to maintain strict financial discipline and a healthy balance sheet going forward as we optimize our capital efficiency with a focus on he has an hour a week. We also plan to maintain sufficient liquidity at a time when the recent Albert.
Operating environment is uncertain and we think it is important not to miss any growth opportunities in conclusion I've also our capital allocation. This concludes my remarks.
That was the key executive Deputy game.
Incident and CFO.
And.
From about 425 will be conducting two Monday, the first 20 minutes will be dedicated to questions from the media and the falling 20 minutes will be questions from the sell side analysts.
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We will commence still questions from the media shortly kindly weighed a little while longer.
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Well my does it doesn't mean that thank you for your patience.
We will now start the given day session with the media.
The responded SAR.
Executive Deputy President and CEO as well if you don't until Dokey.
Senior Vice President in charge of corporate planning and going through why now and I are no me lots of costs.
VP Senior General manager Corporate Communications Department Mommy Remodels.
Well give you will have a question first of all after the asterisk press one on your phone.
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Those of you will have a question.
These press after it and then the number one.
So the two who takes the first question.
You know what doesn't come in a true.
No it doesn't.
Usage.
If your question. Thank you you know with a is my name like them through yes. It can you.
Thank you.
Two questions.
Firstly, the FLIR focused efforts you announcing Justin.
This will be girl, who start from the go diversification into second half is that your assumption.
To give us more about this and also as they're Gonna Christmas.
You're preparing for those who places like.
The movie in time for laws.
Have you been affected by the situation.
Thank you for the question.
Mostly concerned if we are focused.
Dr. They grew into those assumptions what are the was growth soon.
The earnings announcement, we made me.
We used as you know assumption for the whole company.
And it does and the situation excited.
This thing all the business sigmas have become over their own.
The figures and assumptions.
Because businesses all different the geographic areas, though David and they choose to this them and so we do have a unified assumption for the group.
And they are probably the most likely scenarios that gilligan integrated this time.
Yeah.
Yes, so conclusion.
Simon provisions.
Is there any.
Exact only production as things that no.
During the holiday season.
Production is a proceeding smoothly.
And.
Good to development, where the game.
So for the first 30 studio as little as of third parties.
As to their business.
As the gain as things that no there's no major issues or problems that are a bad at this point in time. Thank you.
Thank you regular onto the next question.
Family Gate Ashleymadison. Please.
Yes, I am Shimizu Sammy gay newspaper.
I have a add two questions regarding image sensing.
There is a trade friction between a U.S. and China. So there is visitation hallway. So.
He said that the sensor for gas is going to come down in terms of sales. So what is the impact of this a a bilateral relationship.
And secondly.
As you features policy for hallway the risk for hallway I think it's going to remain.
But the.
I like to make any changes to your partners.
Having a policies regarding your partnership.
For example, innocent like.
Thank you for your question.
<unk> image sensor.
For the full year or what is the reason for the decrease in sales.
Also endesa English is related to the supply chain.
So first of all four specific company eylea refrain from making any comments.
So I do hope that you would accept and understand but having said that currently.
The business 11 surrounding us.
Is.
Deteriorating and because of it 90, especially the high end smartphone market is going tempting.
And that is going shifting towards the mid and low end and zones.
That's a volume don't know I think that is the change that is taking place currently and also secondly.
Well that fiction between the within China are there isn't an impact from that.
So from the risk perspective.
Our customer base needs to be expanded and diversified and we will continue to focus on that a customer base aspect.
Thank you.
Now moving onto the next question please.
From Toyota Quayside Takahashi South.
Thank God you. Some can you ask your question.
Thank you I Anticlastic until you know gays I.
So.
First question.
About game and network services.
One quarter or profit is 194 billion, which I think is quite high.
And.
What about day contributing factors or can you give me some details sales 600 billion.
In 19 Q3 end of the Yeah, I think got the as a those factors the holiday season, but compared to June three.
To what extent.
Well it profit is a much bigger.
And maybe it has to do with advertising.
So what is the change it's what I want to know that first question.
If you have two questions can you ask the second one too.
Yeah.
Yes.
Second question.
About sensors.
So high end smart phones.
There's a shift too low and lead range.
Phones and that hasn't out that profit you said.
If it's this year fiveg smartphones, so going to increase.
So I'm wondering if the high end is going to be weaker I'm just a general feel so can you explain what's happening in a little more detail. That's my second question. Those are my two questions. Thank you for those questions.
So games in the first quarter a high profit.
And the factors behind that is I think got you are asking compared to the third quarter. You said the third well comparison with the third quarter is quite difficult so compared to the year on year, Yeah. If I may explain your on yeah.
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Ben.
We can say it that due to covert <unk>. There is the stay at home with demand and for fourth quarter, New titles had an impact so add on and other software, let's sales that were contributing contributing and though first party and third party titles for both doing.
Well first party.
The last the last part too as I said before it's a big hit.
And that's reservoirs the games.
About.
Sensors.
Changes in the market.
And how are the changes occurring.
Well one thing.
All over the World a there is a oh.
Poorer a sense in the market deterioration of the market and that is impacting the sensor sales.
And also.
The higher priced products.
Well.
It's you could say shifting to.
The moderate more moderate price models.
Overall so.
For our image sensors, especially the high end image sensors.
We sell.
The high end models are decreasing itself that's <unk>.
Impacting our business.
That's all.
Thank you next question.
<unk>.
Mhm, regardless of who leakage and review localism. Please.
Thank you a boat in businesses.
The first question is.
You talked about T.
Sales decline.
Yeah, I mean with higher levels.
In the industry image sensing industry.
What did you say other long term changes what are the short term the changes.
Can you talk to us about the difference and second question also but analysis.
The reserve give 'em de topics.
Got to be more concrete specific about that.
Thank you for the questions.
The long term versus sort of changes.
Interested.
Well the abuse, but currently.
Moving them.
Or whatever we see no we don't consider to be long term trend because it's sort of time.
These same factors that go into this role.
Somehow be.
Oh solved so that the smartphone market as a whole.
He's not declining older large so the transition this year. If there were seeing currently is only temporary we believe as though they are temporary and for this year and for the next year.
Yeah.
A more ready to go in for them to feel that's for sure therefore interfaces.
The most often refer that level of products would have to be our production, we have to make that switch and.
With that there'll be a change.
Because the the change in product mix.
We have to make a adjustment in our strategy and modified or production strategy, but as far as a large stratas goes out the phones smartphones going larger l. using multiple vendors that we will continue.
The performance, Oh, who the camera as required with metals.
Therefore.
I do and <unk> the camera photos on the demand for the higher gold. He will continue therefore, we believe the demand should come back sometime in the future.
Next question will be the last because we are running out of time.
He she doesn't freelance a journalist. Please thank you I am and you see that I can hear you. Thank you two questions.
Regarding image sensor once again.
We fear or his last year, there are increasing number of I lenses and that is favorable for Sony as he has been stated, but they said that high end models are coming down so that trend for multiple Ellis it is slowing down temporarily or.
Oh boy linear moving towards the mid and low and is still not double lenders as could you talk about that second question regarding the BNS business No segment or eight you are in the recovery phase already as you said about the especially.
I will which is the agenda in a market and your geographical area that is having difficulties and also leach either product areas and the geographical areas that are doing favorably.
Thank you regarding your first question.
So a multiple lenses is a positive for us well a high end and mid and low end markets. It you know what is the trend in terms of multiple ended in the mid and low end markets. There's no change in a trend for increased number of Linzess.
They are multiple image sensors used in the mid and low end models as well and that trend has not changed that much.
And a four eat BNS and and as a larger size at the turn has not changed for the BNS.
And areas and that is having difficulties well, okay. Let me talk about Bay area, where there's a recovery.
I already being observed first of all.
A U.S. Europe, and Japan, Japan is doing very well.
So those areas I do see recovery phase.
No so in Asia, and Latin America, there's a slow.
Recovery, so emerging market is having a little bit of a struggle and by product.
TV because of this the at home demand I think.
Are there is a very good appetite for a demand for TV, but their digital imaging is where there's a difficulty or challenged about the in may.
We had a forecast at that time, but the other competitors that the recovery itself with much faster. So we have hopes for the future that is all thank you.
<unk>.
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I'll start the questions from the sell side analysts.
I will be asking S.C.M.C. I am higher thought insides of IR.
The responded our executive Deputy President and CFO, He will keep the they'll keep.
On your vice President in charge of corporate planning and going to finance and I are no me mazzocco.
Senior Vice President Senior General manager Global Accounting Division, you don't go see quoting okay.
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Yeah, the phone from JP Morgan please.
Thank you are those money <unk> Morgan.
The two questions. Please firstly.
Because anything.
In high school her.
The third party filter.
So let go transactions.
They did real well what reasons.
And the so those are the momentum.
Well, there's a june or those deserves a feels as though for that even the.
So to have a onetime events or whether the factors that we see those up or are they also similar to stay at home in fact this old so your sales were up.
And they did it go to big them, though but gearing.
Yeah.
<unk>.
Do you think there. This is those in first quarter. It will continue with impact in second quarter and onward.
And secondly, a boat to again he says a visitor bulky idea was talking about the circle up before the second half of next year.
It's a good maybe they're stuck to the pass for the profit growth.
The two except a few gun.
It would have easy assumptions that are required for you to be able to return to the path for growth.
Well I suppose to be more profitable.
The except that the market the returns would affect the fiveg or high end smartphone demand do think who retired and come back and is there going to fix there are they the requisite conditions or.
Increasing this oh, so reviewing their cost structure.
Are they in fact is left before you do baby Boomer profitable and next year not about the dynamic and use those leaner I do think you'd be able to.
Turning to profitability.
The graph to Bridget Thank you for the questions.
The first point certainly has got a first question is better.
The entire indie game business Oh, the first over the first Buddy.
Third party and there just quickly back to the stay at home demand, particularly.
We had a good results and April after a very.
In will normalize the still compared to that the other thing it appeared that still disease.
As a activity.
Yeah, that's being very high.
And.
In the first quarter.
Oh, we're lucky to be stone.
First party titles.
And a third party free to play.
Titles.
As a because of various events held.
They were very active as well.
I think those weather factors.
And the breaking this down very little difficult, but.
I hope you'll understand.
Yeah, the about the image sensors.
Yeah, they're going to have a mixture it would be the time for a profit growth, yes, that's would be our pursuit.
But beyond they're gonna have next to in terms of that timeframe currently.
Especially the.
There's a slowdown in the high end smartphones, but taking that long term do I think this trend will slow down.
And another point is.
The currently.
I'm just wondering mainly.
The Chinese customers they have a large inventory.
And.
And with the adjustment would happen.
Two been aspect that work that's been affecting our results this year.
I didn't move onto the next question.
And you should listen I think really see.
<unk>.
Thank you.
I have a question two questions regarding image sensors.
Well image sensing that production capacity and the capacity factor.
I know for their projection for second quarter at least give them and then for this fiscal year. The operating income decreased but what was the impact of the capacity factor I'll be a production facility.
Second question.
He image sensing well that's nothing.
Ah you were not able to grow as much as you expected.
So I think if any are you expecting a decrease in sales.
So.
Is it just a delay or is it.
The users design.
Is the Ala Glenn to you to alleviate view revisit your plans.
Could you tell me about that thank you. So first of all you got anything the.
Capacity and didn't get any factor and they think input I so they capacity.
This quarter.
For fiscal Twentytwenty at the industry's corridor.
And that yeah.
That's out in 33 key per month.
Got it must have a pace NFL does end of second.
They second quarter 135 keep in mind, so Oh, we will gradually increasing capacity that's up right now so the number of a wafers to be but.
FX corridor.
And the actual figure and the average fee month is a high degree de 6K for mobile and also for digital camera.
And then there was some <unk> adjustments made for production and also Saudi prediction for a second quarter for that.
And the simple average.
With the month is 112, King so for mobile and digital camera I think that is going to be more production adjustments.
And then.
Well.
Hence thing.
Segment.
The sales is expected to come down and what did the magnitude of impact well last year actual was.
Uh huh.
A little over.
Totaling 30 billion any just like 230 billion. So generally it's like go one third of that is yeah.
You got a reduction in sensor sensing but up.
That's one third.
Big point about that is that as of last year.
Oh, we thought that the growth can be expected. So we need their capital investment and also we have increased our R&D expenditures.
And and bad debt has.
It's been a.
In the impact.
Larry Saul.
Next question.
From Morgan Stanley.
On the phone.
Thank you now.
First question is about games and second question is about pictures.
No games.
Naturally there's the P.S. five.
And I don't think you'll give us any details but from before.
When you give guidance on games about that PS five or price is not the enough then you'd give some guidance there are number scenarios and a highest probability.
One the most likely would be looked at and.
So this fiscal year.
And your plan.
It was best estimation in coming up with a range game for price or.
Volume quantities.
Oh, what kind of range.
Do you have in your plans to the extent that you can give us a hint I would appreciate that second question about pictures.
So the ought to juggle release.
There will be impacts over the next two to three years as you mentioned.
What I want to ask you.
So these are negative factors, but on the other hunt.
For example.
The digital percentage will go up or are they will be upside maybe on the TV side. So in this segment.
The risk reward in terms of profit level.
In the next two to three years, so with the downside risk of theaters, what kind of changes do you see for example, strategically.
That you could raise the weight of digital.
And.
The risk reward upside may not change that much or it will so if you could.
Give me your comments on these points.
Thank you for those questions first of all game.
This fiscal year.
The key points of our plan I think that's what you're asking and to the extent that I can talk about it.
I will.
That is first quarter, but based on results second quarter and onwards stay at home demand will settle down to an extent, that's how we view it.
And also.
P S size introduction.
Marketing expenses, a certain expenses will be incurred that will be an assumption.
But the with regards to the volume and price.
Right now I cannot talk about that.
So you have upside and risk both sides.
But at this point and timing.
We feel that disbalances good.
And we show.
A plan based on that.
And as for pictures.
I think what you're asking is well the theaters ours shut down and you have that impact and then there's.
Possibilities of digital shifting Eau de de players.
Do have strong demand for content so.
Putting that into consideration what is the view is I think what you are asking.
And that will be explained by lots of focus on.
So as you say right you know, there's the impact of Corona virus. So.
So that in terms of production and the leases there is an impact in Pip just but naturally.
TV programs.
Well there there is a good demand continuing.
And so we are an independent the.
Studio and therefore.
When you.
Responding to that kind of good demand than the large.
Movies or the religious being delayed and we believe we can catch up through the.
<unk>.
TV side, and then a we will look at kovats bad situation and in order to maximize value see what should be the release and what should be to sales.
It would be best.
So strategically by responding strategically.
We would be able to respond to downside risk to an extent and we want to maximize value and profit by doing so.
Let's see to the next question.
Like I said Ms for reasonable securities.
Thank you they're gonna speaking.
Can you hear me yes.
Oh.
Two questions about sensors.
Personally.
Those are gonna have to operations.
The looks really the operation will be lower in the second <unk>.
A quota.
Because the <unk>, but the you increasing strategic inventory.
As that happens.
The June 30 was 210 of them and a little bit entry into second quarter can lead to some assumptions.
And secondly.
Did you add it sounds question earlier.
You like to return to property is there could have nextera, but it looks as if the hiring a lot of so then we'll stop absolutely literally just meant by Chinese customers also the over by then so demand to be more butter by that time.
Our next year.
Is your assumption that the keep us it will not increase.
Or expressed to you or increase going forward.
Next year and also about the cost.
I think because we agree with it.
Given that you might do contain depreciation.
So what are the merger route to increase the profitability.
Over cost.
Two questions are received.
And the three cents versus second half operations.
So we lived through to them to via a droppers and the theaters the Olivia.
Speaking, but industries Jason personally.
The first quarter.
The two sutherland's interesting.
Stone.
<unk> for the nine understood. So it was the liberal given to you we had but ended the year I think there'll be a slight increase.
On top of this that's assumption.
But the liberal operations.
The lives of 90% is suitable operation that we are assuming no.
That's related to what I said earlier about a increase in inventory.
Uh huh.
The property return into second half.
Rather assumption as well.
Is assumptions to see increasing diversity is a slight increase is a within assumptions, but the timing of increasing the capacity.
I mentioned that you know speech, but oh, we have to observe the demand situation going for.
So just a tightly with rich dining we should increase that reached timing we should.
Operator or capacity, but basically please.
I think there to occupancy you will.
Increase.
Thank you we have time constraints. So the next question will be the last one.
A couple dozen from SMBC Nikko Securities and Q prejudiced speaking.
Two questions.
First one.
He BNS segment.
And I'm sure that you just we'll be giving the briefing separately, but in the presentation material.
You had a unit sales volume in the forecast.
And I think the impact of covered 19 years coming down, but if you look back at first quarter.
You know as compared to your expectations how was it in reality and also going forward.
I think you have 55 billion for budget.
I thought would you have any other comments that you can add to that and also a slide 24.
Regarding capital allocation and you gave us an update.
And.
1.2, really union or more of a strategic investment. So we tune what how much you have you executed so far and what is the remaining amount.
A if you could share a the breakdown of that that strategic investment. Thank you.
Thank you for the question.
Your first question E B in Es segment first quarter.
And I tried to summarize that corridor.
Well there was some initial simulation.
We have done in May.
So.
Hi, it's difficult to be accurate in making comparison, but.
It was much less predictable in may so based on that is simulation in may actual performance of first quarter much was much better especially for TV.
And because of their demand for stay at home.
Actually the recovery pace was there much better than we expected.
So basically the online sales. So it was increasing you know so once they're supposed to the opened.
And the merchandise would be sold so for the first quarter.
It looks like it was actually difficult to so you know we were short of a inventory. So it was actually very good but for digital.
Allocation Oh, most recently and then there's a good recovery.
And so.
I think if you compare do Lehman brothers.
Situation, well compared to that time at least.
The situation is very different and I think the recoveries much faster that is my impression however.
Regarding restructuring, we want to strengthen our financial status.
So regardless of Oh, we are going to prioritize.
Oh lots inbounds, a you know I think we want to be it you know resilient and we'll be getting.
And also regarding the capital allocation.
That you're asking about.
So more than 1.4 trillion yet.
The ones that we have executed it is nice Eli wholly.
Owned subsidiary and also a SSH, becoming Hello.
Only own sit here he does 400 billion yen.
And then also in just a interim period.
Oh.
We have already repurchased 300 billion yen alone shares share buyback.
So just generally speaking.
So this here 300 billion.
Is what we're expecting.
Yeah, but they depends on what opportunities.
Able to capture so we're flexible about exactly what we do that but that today, we have made an announcement.
About a this a a repurchase operation that will be maximum 100 billion yen.
Thank you.
It is no time to close.
This recently session.
On earnings after the first quarter fiscal Twentytwenty. Thank you for your participation.