Q2 2022 Sony Group Corp Earnings Presentation
Ladies and gentlemen, who knows begin FY 'twenty, one Q2 earnings announcement of Sony Group cooperation.
I am Okada from corporate communications, I'd be serving guests and I still ceremonies today.
This session is for media analysts and institutional investors.
We have sent out an invitation in advance this session is.
With guests.
On our Investor Relations website first.
With that he does ski that's a key executive Deputy President and Chief Financial Officer will explain the consolidated results for FY 'twenty, one Q2, and the consolidated results forecast for FY 'twenty, one followed by Q&A a duration NIS 70 minutes you set out the key the floor is yours.
Today I will discuss the following topics.
The consolidated he's out for second quarter ended September 32 N C. One I increased 16% compared to the same quarter of the previous fiscal year, two to $369 4 billion and consolidated operating income increased $3 2 billion year on.
Year to 310 to 18.5 billion yen both record highs for the second quarter income before income taxes decreased 26 billion yen year on year to 283.21 billion yen, primarily due to a deterioration of valuation gains and losses on securities investment net income.
G beautiful sunny grip corporations shareholder was 210 to 13.1 billion yen a decrease of 245.5 billion yen compared to the same quarter of the previous fiscal year, which included the recording of a $214 3 billion. Yes. The vessel variation that is recorded against the deferred tax.
Please see pages three to six of the presentation material for a depletion of each profit metrics.
This shows the results by segment for FY 'twenty. One Q2 next I will show the consolidated results forecast for FY 'twenty. One consolidated sales are expected to increase 200 billion yen compared to our previous forecast to nine 2 million 900 billion yen and operating income is expected to increase 60 billion yen.
Once you're young 40 billion yen, we have also upwardly revised our forecast for income before income taxes, two 990 billion yen and our forecast for net income attributable to Sony Group Corporation shareholders. There's several hundred 10 30 billion yen forecast for consolidated operating cash flow, excluding the financial services segment.
Unchanged at 890 billion yen. This slide shows our focus by segment for FY 'twenty one.
I will now explain the situation in each of our business segments.
First is the game and network services segment.
21, Q2, so it's increased a significant 27% year on year to $645 4 billion yen, primarily due to an increase in Playstation flight hardware sales and an increase in game software sales of third party titles operating income decreased $22 7 billion.
Onion year on year to $82 7 billion yen, primarily due to a deterioration in the profitability of hardware and Finfet devices.
Our FY 'twenty, one forecast remains unchanged from the previous forecast.
Driven by an increase in add on content sales Q2 game software sales exceeded those in the same quarter over the previous fiscal year.
When stay at home demand was strong total gameplay time of Playstation users decreased 17% year on year, but the fact that add on content sales exceeded those in the same quarter of the previous fiscal year is a positive sign that the quality of user engagement has increased.
In the second half of this fiscal year. The first party software titles horizon forbidden West and Gran Turismo seven as well as major third party software titles are scheduled to be released.
As Laura game fans play these exciting titles.
We expect user engagement to increase even more.
At this time there is no change to our FY 'twenty, one you need sales targets for P. S. Five hardware, but several factors are significantly impacting the supply of the products such as the disruption of the global distribution supply chain limitations on the supply of components, especially.
Semiconductors, we are continuing to exert every effort to maintain the momentum of the Playstation platform by meeting the expectations of the people who are waiting for P. S. Five.
Further strengthened our software development capability, we announced the acquisition of fire Sprite in September and Bluepoint. The games. This month, both companies have excellent technical capabilities and superb track records and they have heretofore contributed to the development of menu of other.
The gaming software titles going for it we plan to leverage these studios to increase the development capability of the Playstation studio and diffuse the expertise necessary to deploy games to Pcs and mobile devices.
As a result of the acquisition that now since the beginning of this fiscal year. The number of Playstation Studios will increase by four to 16 and the number of developers will increase by almost 20%.
We plan to continue to aggressively invest in our development capability going for it.
Next is the music segment, if I 21, Q2 sales increased a significant 18% year on year to $271 6 billion yen, primarily due to an increase in streaming revenues. Despite the impact of the increasing sales operating income decreased two.
56 billion yen 3.7 billion yen Dora than the same quarter of the previous fiscal year in which a 5.9 billion. One time gain was recorded for the transfer of our business outside of Japan. The combination to the operating income of the quarter from visual media and platform.
Which includes mobile game application that 90 minutes.
Dead for approximately one fourth of the operation operating income of this segment. If I 22, <unk> sales are expected to increase 30 billion yen compared to our previous forecast of a bunch of them 70 billion yen and if I 21 operating income is expected to increase 10 billion yen to 202 billion yen.
Streaming revenue in Q2 continue to grow at a highway 58% and 38% year on year in recorded music and 47% year on year in music publishing.
Sony Music group, which is responsible for our music business outside of Japan, where that goes if this thing bucket is cause stickiness is expected to reach record high operating income this fiscal year for the fifth consecutive year, we continued to generate hits, thanks to an intense effort to discover and nurture.
Scientists and acute to the recorded music business had an average of 38 songs is spud advised global top 100 songs ranking.
Moreover, the new songs easy on me, which was released by world renowned singer songwriter.
Although after a six year.
After this on October 14th and made history as the most played song on Spotify in a single day.
And we have high expectations for all of the 30, which will be released next month and so these competitive advantages in the music business lie in a global ecosystem that didn't meet the diverse needs of I just add the fact that because that business usually business as part of the Sunny group, we can offer I just opportunities to express their creativity.
In areas such as game and Pictures. In addition, we are enhancing our many I just friendly initiatives such as offering them financial and other support and we believe these initiatives Ive just been this strong financial performance of this segment next is the pictures segment FY 'twenty one Q2.
Sales increased a significant 40% year on year to 267 billion yen, primarily due to an increase in sales of TV productions at media networks. Despite the impact of the increases sales operating income decreased 1.2 billion yen year on year to $31 6 billion.
Again, primarily due to an increase in marketing expenses related to the release of films in theaters.
What you won't see is expected to increase 60 billion yen compared to our previous forecast of one Chilean why don't you to 80 billion yen and operating income is expected to increase 18 billion yen compared to our previous forecast to 108 billion yen if.
Primarily in the U S. We have begun to gradually released major films in theaters and I've found that that'd be carnage, which was released this month generated box office revenue approximately 10 billion yen in the first three days of its release in the U S, which is the best opening performance of any film during the pandemic.
We are planning to release, a compelling IP from sunny to theaters going forward, such as Ghostbusters afterlife, and Spiderman no way home on the other hand, we plan to monetize that family oriented films that this fiscal year, such as hotel Transylvania and transfer them.
Yeah Ah by directly licensing them to video streaming services as we did not believe they will draw sufficient theatrical audiences. During the pandemic going forward, we plan to continue to respond appropriately to changes.
I admit to flexible releasing strategy aimed at maximizing the long term value of our films.
Last month, we suddenly they're not biting attempt. She did two birds subsidiary of a sudden you pick just entertainment S. P. A Z.
Entertainment Enterprises, a media company in India.
Uh huh.
The proposed merger.
S. B E. It would hold a majority stake in the resulting merged company.
I did that at times. She said the two parties are conducting mutual due diligence D has agreed to negotiate exclusively with S. P. For a period of 90 days, we have to go read of reaching definitive agreements, India has an economic base, which is rapidly growing primarily among the younger generation. It is the largest linear TV.
Market in the World that is still growing in addition, the opportunity for digital distribution services is beginning to grow rapidly due to improvements in India's communications infrastructure S. These Indian business, which includes the video distribution service Sunny a live is a leading TV broadcasting business in India.
And it comes with a slightly less than 40% of the sales of media networks in Q2 as the growth area. The pictures segment, we plan to continue to proactively seek opportunities to expand this business by using the profitability of the TV broadcasting business and their content and so it's just taken that digital distribution service.
No I haven't explained and he made this is that stands the music and pictures segment.
On August nine of this year, we completed the acquisition of Crunchy Bill by funding nation, a joint venture between S. P and Andy Plex country will is the world's largest element a dedicated direct to consumer service with more than 120 million registered users and more than 5 million paying subs.
Scribe is in more than 200 countries and territories.
The market for a Japanese anybody outside of Japan has grown significantly at a compound annual growth rate of 30%. Since 2014, we aim to create the most beloved video distribution platform for anime fans around the world by delivering compelling content to enhance distribution service.
What about by the integration of Funimation and country level.
And next is the electronics products and solutions segment, primarily due to the impact of foreign exchange rates and an increase and this is of smartphones Q2 sales increased 9% year on year to 581.9 billion yen.
Trading income increased a significant 19.3 billion yen year on year to $72 7 billion yen, primarily due to the benefit of the increase in sales and an improvement in the product mix.
That's why 21 sales are expected to decrease 40 billion yen compared to our previous forecast due to Chilean 280 billion yen well operating income is expected to increase 20 billion yen compared to the previous forecast to 190 billion to reflect the results of FY 'twenty one Q2.
During Q2, we were unable to meet the demand for some products because the resurgence of the COVID-19 pandemic in southeast Asia led to limitations on our factory operations and the supply of content. However, we maintained a high level of profitability.
Due to Oh.
And our ability to maintain prices and shift to higher value added models in the TV business. Although we were able to maintain market prices during Q2 and rapid decrease in panel prices going forward could impact the market prices of our products. So we have incorporated that possibility in our forecast and well closely monitor market trends.
Are there to control inventory and margin. In addition limitations on the supply of components, especially semiconductors have recently become apparent and we have incorporated the impact of these shortages in our forecast for the fiscal year.
Prior to incorporating these risks are the forecasted operating income for the second half of the fiscal year was essentially flat compared to the second half of the previous fiscal year and next is the imaging <unk> sensing solutions segment.
That's why I truly do you want any Q2 sales decreased 9% year on year to 278 3 billion yen and operating income decreased 1.0 billion yen year on year to $49 7 billion yen.
Slide 21 sales forecast remains unchanged from the previous forecast, but operating income is expected to increase 10 billion yen compared to our previous forecast of 150 billion yet.
Our FY 'twenty, one self forecast remains unchanged for the the previous forecast.
But the operating income is expected to increase 10 billion compared to our previous forecast of 150 billion. Although the mobile sensor business was impacted by the recent weakness in the Chinese smartphone market that that tight supply and demand situation for semiconductors in general and delays in the production of smartphone and components for smartphones into.
So there's no major change to our FY 'twenty, one forecast with business, primarily due to the positive impact of foreign exchange rates and the reduction in expenses, we have taken steps to minimize the impact on our financial performance. This fiscal year, a restriction on the quality and increasing the price of allergic wafers procured from foundries. Therefore, we have made to expand our customer base.
I'll also progressing steadily however, securing the logic wafer is necessary to increase the quantity and a house added value of our census from the next fiscal year has become a major issue. We are continuing to negotiate with our foundries, but the tight supply and demand situation is expected to continue next fiscal year. Despite these challenges we upwardly revised our fiscal.
I forget so image sensors sold to audio visual and industrial equipment. The market for these sensors is growing faster than anticipated primarily due to recovery in the market for digital cameras and increase in demand for factory automation. This market is more stable than the market for mobile application and.
It has helped.
Our profitability. So we expect that it will contribute to the established some realization of profit of the entire image sensor business going forward now I'd like to discuss the potential construction of a semiconductor factory in Japan, like Taiwan semiconductor manufacturing company, which was set off by T. S. M C. The other day, so any outsourced.
As almost all of the production of logic wafers as part of the process manufacturing image senses, so securing a stable supply of logic wafers is a critical business issue at a time when the global semiconductor shortage is expected to be prolonged because building a factory of this nature could serve as a possible solution.
This problem in close collaboration with TSMC and the Ministry of economy trade and industry. We are studying the possibility.
I think TSMC is Japan factories are sources of logic wafer that remember, reaching all expertise managing our own semiconductor factories in Japan assist TSMC and building the new factory, we believe that further strengthening and deepening our partnership with TSMC, which has the world's leading semiconductor production technology is extremely.
Meaningful Sonny.
However, this is Mike that is subject to further study and discussion.
Last is our financial services segment, it's slide 21, Q2 financial services revenue was $368 4 billion essentially flat year on year and operating income increased 6 billion yen to $43 1 billion yen, primarily due to an increase in profit at Sony life.
Insurance Company limited new policy amount in force at Sony Life. During Q2 exceeded that in the same quarter of the previous fiscal year, primarily due to the strength of our business silly to corporation, if like 'twenty. One financial services revenue is expected to increase 90 billion yen compared to our previous forecast.
The one trillion 490 billion yen our forecast for operating income remains unchanged from the previous forecast.
Lee I will discuss our strategic investments we are accelerating in order to grow over the medium to long term approximately one trillion of export approximately 1.41 0.4 trillion yen centric investment be made from April 1st 2018 do much there.
First 2021 was used to acquire businesses, while the restaurants, you still thing minority equity states.
Steaks, and we purchased Sonny's stock, we expect to generate operating cash flow about Brooks monthly 180 billion yen from the acquired businesses over the three years from April 1st 2021 to March 31, 'twenty 'twenty four is the part of our resources both capital allocation, we intend to use this cash.
So from father investment accelerating the cycle, thereby returns generated from previous investments I used to invest in future growth our ability to invest early in areas with high growth potential has increased and the opportunity to invest invest have also steadily increased especially in the entertainment space during that period of time.
Mid range plan, we plan to make such an investment more than two trillion yen, including Sony stock repurchases. The total amount paid so far for companies and assets that have already been acquired including country roads is approximately 280 billion and the total amount of investment already decided upon its approximately 120.
Last week, we announced the sale of G. S N games, a casual mobile game business and a P. S. C. B plan to reallocate the capital generated from the sale of businesses and assets like this the strategic investment in gross area. This concludes my remarks.
Yeah.
Thank you very much if I said, that's OK executive Vice President and CFO.
From now from.
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No we are going to entertain questions from the media.
We have with us.
Total key executive Deputy President and CFO, but no me Matsuoka senior Vice President in charge of corporate planning control finance and IR. If you have any questions. Firstly I stick followed by one.
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Yeah.
The first is you know Madame Sun from NHK.
Thank you Christian please.
Thank you very much I mean, no matter from NHK can you hear me, yes weekend. Thank you I have two questions.
First question has to do with the impact of COVID-19.
The state of emergency was lifted and economic activities are recovering gradually.
The impact how do you.
Factor in the impact this time and also are there going to be changes in the Ah stay home demand and what would be the possible impact upon your business. That's my first question second question.
He is semi.
Conductor production T D.
T M a.
C O for Taiwan T. S. M. A C is going to establish a plant in Japan and you are candidates for working together with them.
Yes M C and to the extent that you can share with us.
Can you explain how you are going to collaborate with them.
Thank you for your questions two questions I am going to respond to both to both of your questions first impact of COVID-19.
And secondly, a T S. M C. Construction of the plant of D. S. M. C. And then I suppose just shown the SaaS do that with US that you. Your first question COVID-19.
In the second quarter.
The impact of the product of the production and the <unk>.
Logistics is large and we have difficulty and challenge in managing but our frontline people have worked well and it was managed as well as our business going forward.
It is pandemic might spread in the future future and it may subside so.
We have to do.
We had wished she'd be accumulating that know how to respond to such pandemics and respond accordingly last year.
In game business impact or effect of their stay at home demand was large.
And this was a tailwind for our business. This.
This year.
The tail wind is the less we have less impact from stay at home demand.
Your second question.
T S M six new factory.
As I mentioned earlier.
For us.
Image sensor logical wafer and a stable procurement of that is a very important thing for us.
And just stable supply of semiconductor is a key for the Japanese industry as a whole.
Therefore.
Through the as much as possible, we'd like to collaborate on this front.
That's why the details are it is a matter of there are many things which are still under discussion.
And of course when decisions are made promptly we are going to explain to you.
Thank you.
The next question.
Second she had been newspaper says they can please.
Asahi Shimbun newspaper excuse me Keith. Thank you for the presentation can you hear me yes. Please.
Thank you.
I have two questions first.
Imaging.
And that imaging issue.
Unless you explained in T. S. M C M O and Sony will be collaborating understand but more specifically are you going to hold a stake in the company can I answer that and also you say that it will contribute to the death.
These industry on the whole, but automotive sector is.
Isn't it.
So.
I believe them that automotive sectors will also be involved in about gaming.
So the P S five production.
Is that picking up.
And the second quarter again, and a 3.3 million units. So it's slow.
And.
Hi, I'm wondering if you can reach a 14 million that you were talking targeting towards so.
Or is there possibility that you'll be reducing your target can you elaborate on that so these are my two questions. Thank you for your questions then I will respond to both questions.
Well first about the T. S M C and the factory F. T. S. M. A C M. Whether we will hold a stake them in and then your factory well.
We targeting tourism is securing stable supply and them and that is the reason why we are going to support them in building and operating this new factory.
And and so when it comes to the investment and the amount in investment of those details.
I'm. This is currently under study and being discussed and therefore when said there's something is decided we like to pump the inform you.
And about Playstation five.
Well I'm in this fiscal years target.
Well this fiscal year.
And is the second year of P. S. Four it was but there'll be more precise at $14 8 million units and we were targeting them to exceed this number and we have not changed this target. Meanwhile.
Well worldwide and that there is a disruption in the logistics and mainly semiconductors device of supply are being constrained and this is having a larger impact and as you know see hardware sales that are due in the first quarter was.
And are you.
Unit wise and so this is having an impact on us and likewise for the second quarter, but I think of that with our effort and putting in place that different measures and the P. S platform momentum can be maintained and done especially to the uses are waiting for their P. S. Five we wanted to be able to supply as many P. S.
As possible to our customers who are waiting that is our thinking thank you.
The next question.
From Nikkei the Mr. Bum please.
This is Tom from Nikkei can you hear me yes.
And the at the the answer to that's like Shimbun question, you have the other comprehensive mineralization and consolidation and that can only understand that includes equity investments D. S. M C. In there.
Press conference for the joint venture normally they didnt engage in that but this time case by case. They study they are supposed to ability.
So equity investment.
Or the part of the factory is one and the death. Some funding is provided do you have that kind of equity investment.
Thank you very much for your question about this particular issue and.
Let me be redundant, let me repeat myself are currently that discussion is underway and consultation is underway.
And therefore, I'm not able to they'll make comments father.
And once decisions are made I would like to share a way is that decision immediately with you.
Now I'd like to move on to the next question.
If you have any question breast aesthetic followed by number one.
Mr. Mr. Desai from Nikkei Shimbun. Please.
That's what I from Nicky can you hear me, yes weekend.
Thank you I.
I have two questions.
Adia.
Semi conductor their plant was stopped due to COVID-19, and you had difficulty managing the situation.
In order to conducted stable procurement how are you managing this.
Can you elaborate to meet that and also the impact of the shortage of semiconductor is seen in games and electronics and how much of a monetary impact is there can you explain second question.
Capital allocation.
In the.
You have been conducting acquisitions and Kim it ought to be handled in a D V D. In operating cash flow is forecasted.
More specifically.
What area are you going to do this are you going to do an investment or a return to the shareholders.
Thank you for your questions.
I would like to respond to both of the questions.
First.
Semi conductor shortage of semiconductor.
And the other issues of the supply chain.
And you know that too.
Sibley procure what can we do in various ways.
We have been addressing this question.
Come on it'd be making almost sudden derivation of that parts and components and also.
The.
US could be affiliated companies to produce for us and it and where there's a forecast of a shortage.
We will be increasing the level of inventory higher than usual and also changed the design so that the other parts and components can be used.
So various majors can be taken with a combination of these majors so far.
At least up until the first half of this fiscal year.
We have been able to minimize the negative impact and as to the monetary amount how much impact is there I think it's difficult to tell how much but rather I think that we are managing the situation rather well.
In the second half.
This situation is likely to continue.
So I.
As I touched upon in my presentation.
We.
Have.
Factored in the risks in the EPS segment.
With regards to your second question.
Capital allocation going forward.
Basically.
From this fiscal year for three years.
In the midrange plan.
More than two two D young used to be allocated to for a strategic investment as we have stated.
Artistic investment.
And for the growth of abuse business in the future.
I'll be making strategic investments that is our top most priority followed by Capex.
Return to the shareholders in share buyback repurchase of our shares that disorder.
No.
Next question.
Well she doesn't freelancer please.
Can you hear me yes.
I have two questions first.
Imaging sensor.
About the images sensors I think there is some instability, if windows F with smart phones and and but.
What about the product mix changes I'm Kenny explained about the changes in product mix am I going to shrink the smartphone portion or are you going to add on more for the industrial applications. So can you give me a total view about Playstation five and the second question.
Well the production is not I'm picking up.
And therefore, I would like to know.
What is happening.
About the momentum and I do understand that there is that problem, but about unit sales.
Sales and M.
Consumer momentum or you're not facing any adverse situation or do you need to come up with measures in the mid to long term can you talk about your future plans. Thank you.
Again, I will try to respond to both of those questions.
Well about the image sensor imaging center.
Those for a smartphone.
And the other is for industrial equipment cameras and Ah for those applications. So it's a mix of those.
Semiconductors are and image <unk>.
Sensors, and we are planning to add on them, but about the size and scale and the smartphone end.
Market is much bigger and therefore, I think and we have to observe the trend in the smartphone market. We have to carefully monitor what is happening in the smartphone market. That's the first part.
And about P. S five.
Well Lee.
As early as possible with I do these as many units I'm. This is what we have in mind.
But so far.
Oh well.
M a U.
It's about 100 million people P S. Five.
Ratio wise, it's less than 20%.
And so when it comes to use of engagement M. P. S. Five sales does not immediately.
Have impact on users' engagement.
Hum.
Hard to believe that there will be a direct impact no.
Add on content.
Well it is more than Alaska.
The second quarter and year on year, because we think of that the user engagement has improved.
And we want it to.
A tri Ed to pause as they take advantage of this momentum in P. S. Five and also Oh, we have another release in the fourth quarter and therefore, we would like to carefully monitor the trend. Thank you.
Time is getting shield and therefore, the next question will be the last question.
From Nikkei Uncalled Gil Shimon you Scala some please.
And can you hear me, yes, we can please.
Yes, Scala from any Konkle go Shimbun.
I have two questions.
Regarding the yen depreciation and huh.
Much of the business incorporates the impact of the G. P M and the government.
Regarding the equal quarterly disclosure Ah the government will begin the discussion about that and how what is your view about this new initiative by the government.
Thank you very much for your question.
The first question is about the impact of the yen depreciation on the in the business results.
And the second is regarding the review and the revision of food our quarterly disclosure what is our view on it and regarding the first question I would like to answer your question.
And the second question will be answered by much silica sun.
Yes.
So regarding the cheap yen currency.
This time our COO.
Compared to the previous forecast the forecast. This time is the currency assumption is.
The Euro is it are they one year and higher for you and then 131 yen to 130 and so there is a change in assumption and for dollar are the exchange rate is the the stays at the same level of 110 yen and so this input.
That has not changed are the significantly as this indicates.
And this has been already disclosed and one yen higher.
Yeah.
Means.
And what is the impact on the consolidated results.
And for the game network service, and EPS and I and as this business is one year and higher means that in terms of dollar it's positive and in terms of Euro 5.5 billion negative impact is recorded.
And that is a simulation that we include for our forecast and for music and pictures are the combined linear and hire a means that in terms of dollar or the 2 billion yen negative impact and that is the impact on the operating profit operating income and.
And so that is a sensitivity that we use for forecast.
Excuse me dollar is 111 in that is our assumption.
So the one ying are lower so that is a 111 yen.
Versus against the dollar.
Second question.
Yeah.
So I will answer the question.
I believe that there are many different opinions on this but on our part.
For the policy.
The discussion is still underway and at this moment I would like to refrain from making any comment that's that come in from myself.
This time is up.
We would like to now bring to an end that questions from the media members in order to change that question. This.
And our the Christian answer from the analysts a little begin at 421.
Yeah.
Whoopi gain a Q and a session by analysts shortly could you kindly wait.
Thank you very much for waiting ladies and gentlemen, no we are going to entertain questions from the investors and analysts.
Gangosa M C.
From finance and IR.
They respond dense up you don't get a doggy executive Deputy President and Chief Financial <unk> Financial Officer, Naomi Matsuoka Senior Vice President in charge of corporate planning and control finance and IR.
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Yes, My first question.
JP Morgan.
<unk> San please.
Thank you very much either from J P. Morgan.
Game and semiconductor I have one question each fast is about games.
User engagement.
And in the supplementary material page nine monthly active user and a member of a Playstation.
Plus and how you analyze the numbers.
Monthly active users.
I've been a decreasing over the past quarters, but it has stopped the decline and P. S plus members on a quarter on quarter basis is increasing third quarter.
Towards the Christmas period.
Quarterly.
Are you expecting that there'll be a stop in the degree I know M. A U N P. S. Plus this timing, but we are not expecting that the number of increase P. S plus collection.
Contribute to increasing the number of members. If you have any ideas. Please let me know let US know my second question image sensor.
As usual.
Capacity and.
The growth of our wafer input and the extra results.
Also in relation to that thought Exxon earlier talked about.
He took him into logic in the future and this is a might become a point of course suddenly in the future.
But putting that aside for the.
Time being from mobile customers encouraged from the mobile customers, especially in this area.
Next year.
The mix move in Greece, with our sites, becoming larger so is there any change and you talked with your customers. What are the focus of the discussion with our customers can you share with us your ideas. Thank.
Thank you very much for your questions.
Both questions I am going to respond to both of our COO.
<unk> that you have asked.
Last point.
M. A U monthly active users and the P. S plus members the trend of the membership how do I look at it. This was the question.
He is plus.
At the end of June there was a decrease in the number of members and it was a temporary.
Send them and them as.
We analyze.
It is not it.
What's the trigger to the temporary decline is difficult to pinpoint but at any rate. It has already hit the bottom.
Second quarter, especially including promotional activities. It was increased <unk> taken measures to increase the membership so for most of them, becoming effective it's not the wrong at all.
And the recent strength is such that.
Whether or not there is a stay home demand.
It fluctuates and difficult to analyze.
So the after the second quarter has ended and the factor of the stay at home or demand is that's already disappeared as we move through the year and to a.
Holiday seasons, we look at the current situation I suppose Dave and we like to come up is the strong momentum.
And then I and is this capacity.
The numbers.
If I had 21 second quarter end.
In the <unk> in total.
Wondered 40 K per month in the third quarter end.
137 K per month.
As expected.
And this is due to the change in model mix.
And a number of wafers input in the second quarter result.
Three months average is about 139 Kate.
As our first quarter.
Focus was 130 8-K, so it is a practical at about the same level as our forecast it at full capacity in the third quarter the number of wafers.
A simple average of three months is 100 under 30 8-K.
We are expecting food utilization.
And the trend of our largest sites are there change.
Smoothly.
Yeah.
And with our customers not only next year, but Oh, we are talking with are looking into the longer future.
And as we have expected and forecast the trend of larger size is likely to continue to continue.
Specific customer in China is going to.
Drive larger size.
The vacuum and created by their disappearance is not completely filled.
This is Scott.
The pace might slow down slightly as compared to what I have explained last year.
Next question.
F N B C Nicol Pessina assemblies.
Can you hear me thank you.
Well I.
The supply chain issue, including the pandemic intact, and Sage and 22 cash allocation on your side.
And that included I would like to ask two questions first about the impact of COVID-19, well and to the extent in your presentation.
Did that come in.
Second half of the year compared to last year.
That's.
There will be a risk of 38 to 40 billion yen, but other than that and game or am I N. S. S M. The impact in those categories as well Oh Oh.
The campaign to make him a how do you see it them. So I'm if you could elaborate on the overall impact on different segments and then second on page 22 is to capital allocation and.
And then three years it was five point G and I'm capex of more than two trillion yen.
And that is M C talks.
As.
Once this comes up a witch and once it's made public which will be included in I'm. Just it's just a hypothetical question, but and the reason why essence is as an investment size is huge and.
We hear and where I'm wondering if there is an add on effect I just wanted to understand the thinking behind this.
And other than that that strategic investment.
About 120 billion has already been decided.
And I believe them that India Z is included here or if it's not please say so.
So a more than two trillion yen.
I think in terms of the implementation size is still limited so can you elaborate.
Thank you for your questions.
Well at first your first question.
About the supply chain risk.
So as you have rightly said E P S.
It is included and they.
Mount is close to what you were saying them. So this is factored in estimated but if there are other segments.
Well I cannot say anything for sure as well, but I think I'm Hot and there was gained network segment and which is also producing hardware will be impacted and E. P. S. I believe them that they supply delay and impact on profit and loss and it.
It will be totally different and in case of P. S. Five mm mm just because shipment. This late it will not aggravates them. This fiscal year's performance is not as direct an impact and so I think that for this fiscal year. The risk is maybe factored in the E. P. S them and that is M D.
And I'm thinking behind what we have put together here for this fiscal year and the forecast and now that the capital allocation and the U S. M C.
If I talk about T. S. M C. I will have to go into the detail specifics.
And.
It's very difficult for me to explain trying to avoid that.
But in general terms.
Yeah.
If we I'm going to hold a stake it'll be instead your investment if it's capex it'll be included under Capex.
Please understand that to be the case, but this is still under discussion.
And then there is nothing decided.
Please understand that is the current situation and.
How about the other.
The contents about Z.
I took a sudden can explain that but.
And you'd talked about whether M. D is included in there and strategic investment, which has already been decided no. It is not included.
And we have to follow up on what happens from here and after.
Well I'm the one thing on those already decided.
And those are the ones.
Well, we have already made an official approval and made the decision. So that is included in the ones that had been already decided but in or did you get to that stage Z.
Well as I explained.
We are still doing due diligence and nothing is finalized and decided yet.
Yeah.
Now we'd like to move onto the next question I mean mechanism from Mizuho Securities. Please.
Thank you very much my my name is not gonna from Mizuho Securities can you hear me yes.
I have two questions.
They are not related to that consolidated the result. This time. The first question is Mr. Ah The Yoshida mentioned in M. L. P. A connected to 1 billion people and full games are there other figures disclosed but crunchy role.
Z may be included.
And the many other new connections will be emerging so to the extent possible that country rolled 120 million and that is they'll let you mentioned at the end of September. If there is anything that you can disclose please share that with us and if possible at the end of that.
Term about if fiscal year what is your prospect.
And how are you know what way are you going to disclose those figures.
And the second question is related to the project in India and at this moment under the current mid range plan on a group basis.
Yeah.
How clear are the strategy about India is within the group.
And according to my understanding so far are in each business segment has a that it's one of the strategy and currently that synergy Ah is emphasize but still it looks like each business has its own and in India Media network and are the pictures and films.
Fixtures and the music I think the situation is getting better.
And.
My sense is the collaboration between the different segments like in America.
And therefore, the regional strategy. If you have any strategy group flight. Please let us know.
Thank you.
So your question there. The question from you from you and I will answer two questions and the Matsuoka will supplement my answer and the connection with 1 billion people our challenge for that target.
And that is our long term vision.
And also that is defined as our aspiration, that's the way I interpret it.
And so every.
The quarter AR or every fiscal year, it's not like something that we show like subscription and so connecting with 1 billion people.
In order to fulfill that vision, we do need to make investments strategically and that has been executed and other the majors are incorporated and group synergy is also fully maximize personally I believe that throughout a year of engage in different kinds of activities in there.
Date about the activities and following that cycle I think that we are able to share that information with you.
And that's the policy of disclosure, we do not have any the finalized one yet.
So what we do and that it announce it so whether we are able to connect with 1 billion are the people I hope that you'll observe the trend in progress and give us your feedback and second.
The question that is the group wide threat.
These are in India.
Yeah.
Oh, there is a Sony Liv.
And within a group in India are the this business units are is a very important driver to promote the growth and so that is the reason we engage in the deal in India. So information obtained through this other project and the opportunities.
I thought that business areas and among the top are the executives are within the group are the discussion is constantly held so through those dialogue group synergy will be.
Manifested and realized in my view and not just limiting this as a slogan we've like to translate that into actions.
My silica some do you have any point to supplement.
In the India as you know.
Is a big area is the potential for the great gross and Sony Liv.
Has been the increasing subscriber size at the end of the September they'll $470 million is a number and therefore going forward in India.
As a the total goes unmentioned now all the video and music are the pictures and music. We are allowed to use the synergy between the two and also going forward. The whole game potential does exist in India. So that potential will be also taken into.
Conservation and a lot of discussions and the dialogue has been going on.
Yeah.
Time is running short so the next person would be the last person.
Vulgar Sunday E G.
G Securities an awesome. Thank you I'm on for a mogul Sunday.
Yeah.
I have a Christian and confirmation regarding Cmos.
In the market.
Supply chain.
Cmos sensor for mobile.
Sony is are you lowering the price and the market.
The inventory of mobile say set sensor is getting unhealthy some people say.
And to the extent that you can share with us what are the changes.
In the mobile how would you look at the changes in the market.
And in relation to that.
Last time.
At the time of the first quarter, our results more of a wait and wafer unit price has gone down by 10% year on year.
Currently on the monetary amount basis for mobile and for a V.
Camera the ratio is about 70% to 30%.
To my understanding.
Including the first question I do think about the mix in the future.
The.
There's going to be a further focus up on navy or.
And related to that question by Ida Sun.
Custom order.
Support next year, and we'll go back to mobile, which will result in improvement of profit.
So.
Okay.
Can you. Please explain this sorry for the very question. Thank you very much for your questions.
The market is more of a sense of how do I look at this market.
If I'm to explain this.
The market continues we will continue to expand.
And of course for the industrial machine and for a V.
Stably.
It's stable in the margin is high.
But in terms of the size of the market mobile market is a much larger you said 70 to 30, but the ratio of mobile it is even higher than that.
Well.
The inventory level of the sensor market.
To the extent of my knowledge.
Right.
Is it the kind of inventory, which will have a difficulty for negotiation with our customers. We do not hear such voices that's all for me.
This is it is a in the course of negotiation and discussion with our customers a price that is discussed but when it comes to specific prices.
I would like to refrain from referring to specific prices.
Well enough or it.
Our policy remains unchanged for high end.
Larger size this market will grow and expand.
So.
This is where we can leverage the strength of our technology.
Quality.
And a.
Gotcha, and then both big source and more a minute and the move to pursue both.
So depending upon the needs of the customers, we have to grasp of the needs of our customers and we it will b E.
Competing in the field, where our strengths can be maximized so the big trend remains unchanged.
The production capacity will be increased as the demand increases and strengths on R&D. This policy remains unchanged.
That's all from me thank you very much.
It's time now for us to end todays Q2 earnings announcement meeting.
Thank you for your participation.
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