Q3 2023 Sony Group Corp Earnings Presentation
This conference for the announcement of changes to Sony Group management structures structure.
And today I will be the master of ceremony Ishi from corporate communication Department Nice to meet you now I would like to introduce to you who on the stage.
Mr. Kato Yoshida currently direct representative corporate Executive Officer, Chairman, President and Chief Executive Officer, who will assume direct representative corporate Executive Officer, Chairman and CEO as of April 1st this year and Mr. He Dokie total Q2 active representative cooperative.
Executive Officer, Executive Deputy President and Chief Financial Officer, who will become director representative corporate Executive Officer, President and Chief Operating Officer, and Chief Financial Officer. Just features movie made Andy order of Mr. Yoshida and then Mr. Total, Okay, and we will take questions afterwards.
After the Q&A session, we will have about five minutes for photo session.
Overall, we plan to have about 40 minutes for this oh.
Press Conference and then followed by the a briefing on the Q3 result, Mr. Yoshida, Please take the podium.
Okay.
Thank you all for coming today, despite the short notice.
I would like to explain the executive changes announced today.
Effective on April 1st.
It'll keep pataki Colin for your executive Deputy President and CFO will be appointed.
<unk>, CEO and CFO, and I will become chairman and CEO.
These changes are intended to strengthen.
Group managements locked your.
From a blue one was we will describe for the father evolution and growth of Sony under this new management structure.
First I'd like to touch on the background of these management changes Sony is engaged in the diverse businesses based on our purpose to fit with the world with the emotions through the power of creativity and technology. Furthermore, in April 2021, we transitioned to a new group architecture on theirs.
Published Sony Group cooperation, which is aligned with all our businesses in equal distance mono.
Our approach to business management is one where the vectors so each business connected by the social significance of creating and delivering of condo, but also emphasizes the autonomy over individual businesses organizations and employees on the other.
In order to enhance the group's overall value so, but a long term perspective, it's vital slowly implement capital allocation collaboration between businesses and the business portfolio management.
And to do this I concluded that we should strengthen our management structure.
Proposed to the nominating committee of.
The board of directors to.
Promote Mr. Total key who has deep understanding of each business operation.
Two president and I appoint him as CEO. This proposal was approved today.
He will also continue our CFO. This is because the CFO also needs to have a deep understanding of the business. We believe that this role is closely related to the duties of the CEO.
Four o'clock Smith's three five years since I became CEO in April 2018, she has been a driving force in the implementation of growth strategy for the group, particularly from a financial perspective seeing his role as CFO his greatest contributor.
<unk> has been in supporting our investment for growth primarily in two major areas one is content IP.
While we have made acquisitions in the DTC domains, such as argument distribution company crunchy role.
Have focused particularly on strengthening our content IP.
This started Florida acquisition of EMI music publication in May 2018, just after I was appointed CEO.
He led this acquisition, including the numerous duration or terms.
Yeah.
The other is semiconductors.
I regard Cmos image sensors of creation semiconductors that generate condo.
Yeah.
He has supported our investment in this area, while managing risks through in depth discussions with the business side regarding demand the competitive environment.
Ultimate Roadmaps.
He has other contributions included.
Setting the to treat you in yen flame work for strategic investment in the current mid range plan. This investment framework established by him has led to an improvement in the growth mindset of the entire group.
Furthermore, there is also the repurchase of our shares which we have positioned as a part of our strategic investments.
Cross country, taking investment opportunities on the financial conditions into account.
She has supported the repurchase of approximately 500 video and you end up Sony shifts since fiscal 2018.
I have worked with Mr. Toto <unk> since 2005, when I became president of the summit.
I've also learned quite a lot from him with his strategic perspectives and compressing the blow the extend external environment.
Furthermore, he has the experience with planning and founding Sony Bank himself, a little plating it as a representative director.
He has.
Cumulated, a wide range of experience, including a dialect III, leading a larger organization as the head of Sony mobile for more than three years, starting in 2014 going forward I'm confident that he will make an even greater contribution to enhancing our corporate values.
As president CEO and CFO.
As part of airports strengthen our management structure. We have also decided to appoint toss them or don't meet domo as the executive Deputy President and CFO Mr.
Mr meter more possesses extensive experience in the intellectual property feel technological expertise and strategic perspectives.
Most recently he has still been seeing areas, including our new business development and corporate venture capital and these leading discussions are close to group in areas such as virtual production on the metal booths.
At Sony we apply to our business in the condo value chain, creating and delivering candle.
And he helps an important role in expanding and deepening the scope of this business I look forward to Mr. Mittal more in collaboration with the Slovakian Tunnel force appointed CTO last year further contributing to Sony's evolution as a creative entertainment company with a solid found.
Station of technologies. So its purpose is to fill world with emotion and its corporate direction of getting closer to people will remain unchanged our blocks.
<unk>.
<unk> hundred 10000 employees, who share this purpose a driving force of the Sony Glutes, our diverse businesses. The management team will work together, one along with our employees to create values from a long term perspective based on their purpose.
That is all for me thank you.
Yeah.
Okay.
Next.
I'd like to invite Mr. Turkey.
I am the Hiroki, Turkey, and it would be assuming the role of President <unk> COO and CFO of Sony Group. Thank you for your attendance and grateful to Mr. Yoshida and the board of directors for their trust in recommending and appointing me and at the same time.
Feel a great sense of responsibility.
To introduce myself.
I joined to Sony in 1987.
And after working in finance, including an overseas assignment in London I left Sony in 2010, two to take on the role of represented two director Sony Bank accompany that dialect in establishing Baltic to us on a small scale the experience of launching and managing a new business the way that spirit of startup.
The foundations well if my current value perspectives in management than in 2010, five I moved to ISP business. Soon it well I took on a wide range of roles, including CFO and Mr. He or she does leadership in December 2013, I returned to Sony and the following.
Roes, including CEO of Sony Mobile and corporate Executive Officer, and CSO of Sony I was appointed to my current position as CFO in 2018, when Mr. Yoshida became CEO Sunny since then as a member of the management team led by Mr. Yoshida I have dedicated myself they have seen the corporate value of the Sony Group.
This fiscal year is the second year of our current fourth mid range plan. Thanks to the efforts of management at each of our businesses and from each and every employee we are forecasting strong results this fiscal year, including record sales in more than one trillion yen in operating income on the other hand looking at the current.
Business environment, there is increasing instability near there.
Factors, such as the uncertain global economic outlook, Yeah, political risks energy issues and the natural environment. In addition, I theater, an acute sense of urgency that there is a fine line between whether we can channel the rapid evolution of technology with AI as a leading example into further.
This growth or Conversely, whether our business there'll be disrupted by it as a business environment and technology continues to undergo grade change I believe the key to increasing the resonance of the overall Sony group is evolving our diversity divesting out of business and talent is part of Sun is DNA, but we must further evolve this diversity.
Our goal is to bring together people with various attributes experience and expertise from inside and outside the company to co create the future by unleashing their ideas and creativity and to continue to grow both as individuals and as a company.
By leveraging the Sony groups diversity, and continuing to evolve and grow.
To create a positive spiral that begins with sunny being chosen by customers, which then energize our employees enables us to attract more new talent increases our corporate values and ultimately enable us to give back to society working together with Mr. Yoshida, Sony groups management team and <unk>.
There is around the road I intend to continue to develop through my Air Force to the further evolution the growth of our business based upon our purpose I look forward to your continuous support.
From now we would like to take questions and time for questions and answer is about 25 minutes and due to time constraints, we will not have to separate the sessions, we would like to.
Take questions from the investors and analysts and those who are asking questions online I place a connect your phone to our branch offices and those who have questions. In this venue. Please raise your hands and those who have.
Questions online. Please press one after the asterisk key on the phone and in this tenure of our staff will bring you the microphone and due to time restriction, we would like to limit. Your question to one question per person. So please raise your hands and you have a question.
Yeah.
Yeah.
And.
That's all right.
The second row from the front on the rate.
She may from NHK.
I have a question to Mr. Takeda in U C E O N E.
Self introduction you are talking about the the Sony Bank and they talked about the venture spirit and so we'll be continuing our your position as a C. C F O and they become a C. E O. This time and as a C. F O you have Uh huh.
And.
So and your position as the president well.
<unk> would you like to developed and what is your I wish for you and your position and thank you for the question.
And so the the management and also the group business will be continued and with the current our mid range plan. We have some plans for the actions we will certainly put those actions into place and basically we would like to strengthen all aspects of our business.
That's my basic thinking.
Thank you next question please.
A person in the middle row.
The third row from the front on the right side from this side.
And I'm afraid I understand analyst I have two questions.
To Mr Yoshida.
The session is.
Presented in.
It is great to have it into support by a person who is quite knowledgeable.
About theater finance and at the same time I recognize that the CFO has certain.
Unique.
Oh, sorry, T and does do you think that there are any conflicts or problems.
For a CEO is there's also a CFO and it appears to me that this is rather sudden that this announcement was made so why now that's my second question.
Let me then answer to your question.
How about the first question, whether the double counting of let's say U S. F O B a problem well this is C O O.
I'm, Mr topic, especially I'm, just going to be a good C. O O C E O S C O O and Oh, so it'd be a little bit different from a giving you direct instruction to the frontline. So this is a oh position who understand stay at operating in parallel to that but how does the C. F O M.
When we think about the group structure of our company I think this is a reasonable and efficient and are in this group and each part of the group and we're going to have confirmed the standing of each parts of the business to lead the way.
For further growth I think it makes sense and the second question was why now and Sony Ah Ha is now practicing range business plan of the plan and we are right in the middle of the Forest Ranch plan and Oh.
Do we have a business planning people, but the extra management itself is being done with a long term perspective, and the moment when we look at the external landscape. There. The change is accelerating as Mr. Tuttle can you also mentioned that the technology is changing rapidly.
So there is a.
Heightened geopolitical.
Political risks and so.
As I mentioned capital allocation and also databases, but two business collaboration and also their portfolio management of the businesses need to be strengthened.
That's all.
Yeah.
Although we'd like to mobile and to the next question.
The second law, Florida plant on the site.
My name is stuck on a cliff long TV Tokyo I have a question to US go buy your stuff.
And there's a management changes will lead to two top the sluggishness.
It has hung in total.
Both will be able to flow more financial sectors financial a REIT areas, so what's going to be the impact.
The two top slot you solved the management.
The purpose.
Of these management changes is just to strengthen our management structure and architecture.
On the we assigned a new CEO.
The capital allocation business portfolio management on the business flux, you're managing it.
Is to be the opioid it for sure that's the purpose of.
As a CFO experience that's quite right.
And I myself.
Has been subbing for summit, the Internet Global I do sobbing surplus center for nine years, So I think that the blood or you'll be experiencing is quite important for us to serve for the company, but he has ever worked for.
For the start of the Sony Bank and he has been sobbing surplus central to Sony mobile as well so I do believe that the huge and take the literature shoes so experience.
Yeah.
Now next question the person in the middle.
Second row from the life from the top from the front.
Yeah present, each at present had to slow down our mission. So horizon is a focusing up on manufacturing and candle yesterday that used to be kind of closer to the people that understand what is the slowdown that you have in mind.
Thank you for your question.
I am focusing upon growth.
Business and company.
If our growth is stagnant in various ways, one thing still falling to negative spiral.
Therefore, I am focusing above growth and realized growth.
As I said in my speech.
I to be chosen by customers and energize people and positive aspire is to be created.
So in short it is a growth.
Thank you.
Next question please.
The person in the middle row, a second from the front to the left side from this side.
Thank you very much for this opportunity could have come from that and U K.
And I would like to ask a question about the necessity of see Oh I'm. This is in the comments I missed the semi about the necessity of the let's say Oh, there was a discussion in the board and are in the past and Mr. E days here and there.
Let's stay at the CEO and to see Oh, a separate and there was the the split between the C. E O N C O under Mr. Howard Spring and whether they are functions are now there's another question but.
So in order to maintain the the forces the Oh I think it maybe a difficult question to answer but when you have the C E O and see Oh, they're some views that there may be better to be a separate it in terms of the functions what do you think.
Well or Sony's management, well myself Ah, it's not so much there one top management I am part of their management team and that's what we have been demonstrating is the management of our business so with that.
As I mentioned external.
Landscape there are major changes happening there geopolitical risks and acceleration of technology.
Technology and then also these positions Oh, Oh independent position well are valuing the Ah.
Independents, we together think about the the business to business collaboration and also the business portfolio improvement. So I'm mean, Oh, the management team nice the the deep understanding of the external environment of course, Mr. Total he has a deep understanding of that.
External.
Landscape and with this the titles of the C O N C F O I.
And are.
They they he can bring it to the higher level of the the understanding and elevated to the higher level his understanding of the external landscape.
Next question please.
I would like to take questions in the middle low.
The second Florida plant.
My name is nishida freelance journalist.
Other questions.
The C E O.
Its positions.
So in terms of the strengthening of the product portfolio is quite well understood, but would you. Please be a bit more specific what we want to do so you should not science leadership total China leadership, what they will be.
And how are each of you would like to work for Sony Group.
Probably total Sun will make another comment and that's for the details on that subject to the discussions are from now on.
As for our business structure. So we have six segments or businesses. The we have to maintain let them go but as for the discipline of the.
Corporate management, we should literally check whether whatnot those portfolios and segments octomom that should be the role of the board of directors under management, that's my ideas.
So I'd like to make some additional comments for the questions.
As for the business portfolio.
Should not be a static that should be dynamic.
The diversified business.
Means the different harvesting cycles, so we need a cyclical revisiting.
The reviews of those business portfolios saw source to be update.
And we need an almost power to do so so Yoshida San said.
The strengthening of the management structure.
Blockchain is quite plausible for us to carry on and we have to raise the management capabilities.
I have to the play my role to do that thank you.
Next question.
For those of you online if you have any question.
These press one for us.
U S.
Our strict followed by one no the person third light's third row from the front.
Yeah.
Yeah.
Yes, you got it from you can't go go Shimbun.
Two questions so the toxin.
Sony groups.
What kind of company with your likes to.
Steer the company into your vision and I think this is a message for the employees as well what is your vision for the company and Mr. Total Geek personally.
There are tradeoffs something belief that to Oh, you think is important. Thank you very much for your question what kind of company I would like to make a sony into it you should the Sun and we.
Defined.
And expand the kind of value chain and we have been.
Sending that message internally and externally we have to make this more concrete.
Idea away would be without having to explain everybody can have an image as to what we have to do that is the idea of a situation. So we are going to bring this into reality.
Yeah.
As for my belief, our credo, it's not something that a big bad.
From before.
The key of management is acreage and patience I like they're saying.
Many people are saying this.
Hugh.
But I was wrong is engaged and management of the company.
Identifying risks and make a judgment and you have to have the courage to make decisions.
Also at times, even maybe a phase III as a headwinds and also contradiction, but you have to persevere and should have patience and I feel the need of patients.
I am telling myself the importance of this always.
Yeah.
Let's move onto the next question.
So the person in the middle row on the far right. These are different right.
That's great. Thank you very much for this opportunity it sounds like you're from Toyo Keizai.
And under the new management structure, yes that sounds good to me.
To see.
And so to the extent I believe you have exited you position as I C. F O as well what are the other concrete actions and whether any other choices of options.
Well.
So this <unk> a change too.
Sony Group management structure.
First we had a discussion with the nominating committee in July last year and at that time I and.
And of course, there were a lot of discussions but I.
Then I talked about Mr. Total case, our strengths and our biggest strengths I think.
Is the are the strong well well that's for growth and I think that is a very important key attributes that is required of the Ah Ah and Nash.
Management, All theater company and the company grows.
I think it's important for it to result in the the gross of the employees as well so that's my view and I.
Strongly stress that that Mr. Total key is a suitable as a new leader of our Sony Group and that's what I've been repeating two the nominating committee as well as in the the board meeting he says well at several occasions.
Let's go to next question.
Yeah.
On the on this row with white shirt.
My name is Sasaki urban UK business I had two questions.
The experienced CFO eyal, what's either positive effect on your future shops.
How you can take deliberate Dolby experience as CFO.
That CEO, Mr Yoshida, what youre going to do with us and.
<unk> CEO.
Thank you.
On the first question is to be answered by total charm.
And what I'm going to do Hudson CEO.
There are so many things for me to do.
Ultimately I have to take ultimate responsibility sub the Sony group.
CFO experience.
How are those experiences so will solve positively.
I'll do my shops.
CFO.
The depending on the companies on the probably the rules might be different even though they they may carry the same name.
CFO in the Sony Group has a wide range of rules under quite deeply involved in our strategies and the management.
And that's been true since Mr. Yoshida CFO.
And the dose experiences.
Should be quite positive Pos.
Positively subs.
To be the president.
Because we can't have a <unk> view of the week and read all the financial figures on the weekend.
That take literature, all of those ideas are familiar interaction with investors and analysts. Thank you.
Let's move on to the next question.
Anybody who are connected to online.
Please press the <unk> followed by number one.
Yeah.
If not then once again back to this room.
In the center that are in the center.
The front room night.
So am I from U K E S G.
I have a question to Mr. Total kit.
Mr. Yoshida after he became president creativity. He has been saying that that he has a purpose of theater brought with emotion through the power of creativity and technology and have been working up on this the toxin.
You become present, what would be the priority areas that you like to address thank you for your question.
I myself.
As you will see that Sun.
Clearly defined purpose.
And disseminated this purpose to the group as I mentioned earlier, we have to make sure that the purpose takes root in the group and we have to make sense, the pepper seem to something concrete.
That does itself.
Is that the.
The kind of value chain.
So it just made into something concrete kind of value chain, we create a candle and deliver kind of.
And that's where we are doing our business.
So we have to make this an even stronger and wider in the range. It's well that's all thank you.
No Oh, yeah, I'm running out of time, so we would like to take one last question.
So.
From J P. Morgan Securities Mr. I end up please ask your question.
Thank you very much.
My name is Oh, yeah, that's from J P. Morgan.
No I have one question about this management change Mr. Yoshida from you said, so Turkey, each about the Oh group and executive officers, what did you tell them or what are you planning to tell them or.
And also to the employees are what are the messages from.
From each person I would like to hear it. Thank you. Thank you for your question well already the message has been issued and today as I mentioned in my speech mm Theres a change in the external environment and also there are things that we need to tackle the internal.
The we I have already conveyed to our employees in the same manner I mentioned in the speech and also the purpose of the company and also how we're going to get closer to people that will not change and together, we're going to attain further gross and that was my message.
Myself to basically I delivered the contents of the my speech with a little more meets to it in a sense to our employees and also too.
The key team members.
Individually I had the opportunity to speak to them one by one and so I.
Asked them for their cooperation because that would be assuming this new position and are we received a lot of feedback through the email and messengers I would like to take my time to read through all the messages I'm looking forward to doing so.
That's all.
Thank you very much. It is time. So then this concludes the question and answer session.
And next to them there will be a photo session.
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Ladies and gentlemen, let us start a Sony group companies and the consolidated financial results announcement. My name is Gigi awful Amaya loopholes financial Department I'm happy to SAP as a and C are the.
The police side, let me introduce those who are on the podium here total key executive Deputy President and CFO.
MS <unk> Matsuoka senior Vice President in charge of corporate planning controls support for financial business and entertainment AWS. So that school Hayakawa senior Vice President in charge of finance and I. All those three are the on the podium first topic. Some will have the floor to talk about that.
Q3, FY 2022 consolidated financial results and then go down to the question on Sundance a.
That's for the questions and answers we will first entertain questions from investors and analyst then to the separate sessions off low media.
In total we are planning for 45 minutes off of the related documents are we have posted on the IR website. Please refer to that so total selling you have the floor.
Okay.
Yeah.
Today I will explain the following.
Consolidated sales for the quarter increased 13% compared to the same quarter of the previous fiscal year, two three to one $412 9 billion and consolidated operating income decreased by $36 4 billion to $428 7 billion yen. This operating income result was close to the record highs reached in the same quarter of.
The previous fiscal year, which benefited from the recording of 70.2 billion yen gain on the transfer of our business in the pictures segment income before income taxes decreased by 63 billion yen year on year to $398 6 billion and net income attributable to Sony Group Corp's stockholders decreased by 19.4.
Billion USD $326 8 billion yen the results of that quarter by segment is shown here next I will explain that fiscal year consolidated results forecast.
Consolidated sales forecast is 11 2 million 500 million a decrease of 100 billion yen from the previous forecast we have upwardly revised our forecast for operating income by 20 billion yen to one and 180 billion yen on the other hand, the forecast for consolidated operating cash flow, excluding the financial service segment.
Has decreased by 270 billion yen from the previous forecast to 550 billion yen, primarily reflecting a significant increase in working capital now I will explain our inventory situation, which is the primary cause of the increase in working capital inventories at the end of the current quarter, where once a year $464 5 billion yen.
An increase of $48 1 billion from the end of the previous quarter.
Yeah, and then their segment the increase in inventory is a Playstation five well we didn't production itself expanded significantly during the quarter and Playstation VR too, which is scheduled to be released this month a notable the primary reason for the increase in working capital was our decision to raise the level of inventory in an effort to ensure.
That we can achieve our sales plans for the fourth quarter and to maximize the paper penetration of P. S. Five because they are in their continued risks related to the supply chain and logistics for P. S fight in the E and S segment, although inventory deduction progress to a certain level from the end of the previous quarter, we recognize that.
It is still slightly higher than the appropriate level and we plan to accelerate further reduction towards the end of the fiscal year in the eye and it's a segment. We are continuing to manage strategic inventory play paying close attention to inventory quality and carefully balancing inventory risks, while maximizing the use of existing capacity and optimizing the timing.
Capital investment the forecasts for each segment is shown here.
Now, let's move on to an overview of each business first is D and air segment.
22, Q3 sales increased a significant 53% year on year due once you're on $246 5 billion yen, mainly due to the increased sales of hardware and the impact of Forex rates foreign exchange rates operating income increased significantly to $23 4 billion yen year on year 210 to 60.
Point 2 billion yen, mainly due to the impact of the increased sales of first party yourself to where despite an increase in cost the focus for FY 'twenty to yourselves is unchanged from the previous forecast we have upwardly revised our operating income forecast to 240 billion yen, an increase of 15 billion yen from their previous forecast.
Expenses associated with acquisition for the current fiscal year are expected to be approximately 57 billion yen seven point to one media and getting it appears five hardware, but so did during the quarter and the cumulative number of units sold by the end of December exceeded 32 million based upon this result, we have set.
Our forecast for the fiscal year at the 19 million units.
By optimizing our operations, we are exerting every and for it to do so as the menu needs as possible to meet the strong demand.
Due to the penetration of P. S. Five that percentage of P. S. Five users in the number of monthly active users in December increased about 30% engagement metrics are users who transitioned from P. S. Four to be as five such as our peers plus subscription rate gameplay time, and average spending amount I forget it.
With significantly higher than those when the place. They played on P. S. Four and we will continue to focus on accelerating transition of bass for users to P. S. Five in addition, nearly 30% of B S wipes and use a user who never used P. S. Four so we the spread appears fight the acquisition of new users is progressing.
Although total game play time of all Playstation users during the quarter was down 3% year on year. It was up 6% compared to the prior year quarter and it was up 14% in December compared to the prior months. We believe that user engagement is on a recovery trend due to the penetration of P. S five and the contribution of <unk>.
Hit titles in terms of software for Playstations than new title God of War Ragnarok record net sales of more than 11 million copies in the first 10 weeks. After its release on November 9th making marking it the fastest selling first party title ever looking ahead to next fiscal year, we have a strong titles planned it to be really.
For both first and third party, including Marvel Spider Man two.
This contribution of P. C software is steadily increasing thanks to the rollout of our popular IP to Pcs, such as Mango Spider Man Mildest morale is which went on sale sell in November as what Bungie preorders are steadily increasing for the destiny two light for expansion, which is scheduled to be released this.
Month.
On the 20th second of this month appears to be able to will be reduced worldwide by maximizing next generation sensing functionality underperformance appears pipe. We aim to provide a virtual reality experience like never before.
Some of the launch we are preparing a line up more than 30 titles, including lies on call up the mountain the latest title in our IP and Guangxu leased in seven of which will be upgradable to P. S. V O. Two for free in this way we are seeing a steady results from the various measures we have taken in terms of both hardware.
On software.
We believe that we have created positive momentum to reaccelerate the growth on the game business centered on the expansion of the penetration of P. A spike next see some music segment. Therefore, 22 Q3 sales increased by 23% year on year to 367.7 billion yen mainly due to.
The impact of foreign exchange rate and the increase in our streaming sales whole plating income was 63 billion yen inquiries. So about seven 8 billion year on year.
The contribution to operating income from a visual media and platform accounted for approximately <unk> 10 per cent or they'll plating income of this segment for the quarter. There is no change from the previous fiscal year focused streaming. So so in the quarter continued to grow steadily.
Year on year increase of 33% of the recorded music on 60% of the music publishing, 7% and 28% respectively on the U S. Dollar basis in recorded music. Following the first half of the fiscal year drilling, which we had the menu new albums hits buyout as such.
As Holli stylus and beyond we continue to generate hardship turned we double each of 38 songs in the spot buys top 100 weekly global music lunching, so in the coming quarters.
Among them are the singer songwriter sees US Alabama is Suez a reduced on the December 9th became a big hit our remaining the number one in the Bilbo 200 for the constructive seven weeks after the release in music publishing Oh affiliated song lighters participating in all of the top five most us.
Screamed albums, and Spotify in calendar year 2022.
And we believe this further solidifies <unk> position in the.
Industry leader next piece the picture segment flight 23, Q3 sales was 331.15.
<unk> 5 billion, a significant decrease of 28% compared to the same.
Same quarter of the PV yourself fiscal year, which benefitted from the blockbuster release of a Spider man, Norway home and U S TV Skip Seinfeld.
Operating income fell by singing you become a $123 9 billion yen to $25 4 billion yen, primarily due to the recording of the game format transition gloves DNS games business in the same quarter of the previous fiscal year and the impact of the decreased inside our cells.
Slide 22, focusing sales on a one <unk> 400 billion decrease of 40 billion from the previous year. There is no change from the previous focusing for operating incomes do.
Due to the fewer films huh.
Being released the result, mainly from the production delays.
Blows by the COVID-19 situations and box office revenue in the U S calendar year was all about 60% of their calendar year 'twenty 19 next fiscal year, Sony plans to release highly appealing films, including the sequel Academy. When you are winning animation film despite them.
I close the Spider both on the New film Sony Picture Universal Marvel characters following months.
Our bedroom.
We also.
Crunchy low despite our members exceeded our 10 million is the top of the Ah that by the end of the next few years and we all hope that's evidenced by the release of about one piece Phil Lind.
Following on Oh from Unchartered, which recorded box office revenue of more than 400 million U S dollars worldwide with more than 10 projects under the way convert games IP to video, including gone to this more and go to work or the live action TV drama adoption over the last school bus, which began airing HBO.
HBO Max and Max January 15th that began the big hit in the first steps toward since its first lease with the 22 million.
Due to this are the game the last Uh Huh, that's about it at least in the 2020 and Amazon cells lacking FOUP peer support software in the U S, which has a positive impact on the game slow mobile in March we plan to reduce the first the PC game software.
Using this IP in display we plan to further increase our strengthening our values highly appealing IP.
Who are multifaceted exploitation of the IP into the collaboration after so Bob.
Next is the entertainment technology and services segment to FY 'twenty to Q3 sales increased 10% year on year to $752 8 billion yen due to foreign exchange rates and increased sales of digital cameras operating income has increased.
1.1 billion year on year to 81.1 billion yen, primarily due to the benefit of the increased sales of digital cameras. Despite the impact of decreased sales of TV said FY 'twenty to focus for the sales of two Chilean 480 billion. A decrease of 30 billion then from the previous forecast there's no change from the previous forecast for offer.
Income by responded swiftly to market changes and minimizing the impact of the economic slowdown in deterioration of the market environment in certain categories, such as Tvs, We secured a profit for the entire segment during the quarter that was the same level as the same quarter of the previous here regarding interchangeable lens.
Cameras, although the pent up demand due to product shortage in the previous fiscal year is abating. There has been no noticeable negative impact from the economic slowdown so far and it sounds like relatively stable, we have been able to control the supply chain disruption caused by the resurgence of COVID-19 in China since the end of last year, so that it does not affect cells.
We are closely monitoring the situation after the Chinese new year and are taking necessary actions, we anticipate that the business environment will become even more severe over the next fiscal year. Therefore, we will revise our sales plan for the first quarter, even more so evidently and we'll proceed with the business operations with a top priorities being prevention of any negative impact.
From being carried over into the next fiscal year and acceleration of our efforts to further strengthen our business structure makes this a I N S. S segment FY 'twenty to Q3 sales increase this.
Significant 28% year on year to $417 2 billion yen, mainly due to the impact of foreign exchange rates and increase in cells.
Sensors for mobile products operating income was $84 9 billion, a significant increase of $20 2 billion yen year on year, mainly due to a positive impact foreign exchange rate. Despite an increase in cost both sales and operating income for the current quarter were recorded height of war.
This segment the FY 'twenty it yourselves forecast that's been D has been decreased 20 billion yen from the previous forecast I want to be in the 420 billion. There's no change from the previous forecast Philadelphia, writing income.
The smartphone market continues to be sluggish.
Center to mid range and low end products in China recently, and this trend has become.
Partially a conspicuous for high end products as well, but that is hardly within the expectations of our previous forecast at present, we assume that the smartphone market will recover moderately starting from the second half of this fiscal year ending in March 31st 2024, and we are proceeding with the careful verification and assessment and prep.
Operations were formulating a business plan for the next fiscal year on the other hand cells of a large format high definition sensors for flagship models have grown significantly from the previous fiscal year, leading to significant growth in sales for the segment, we believe that the growth and the trend towards larger size higher image quality high performance mobile sensors as a major chip.
This quarter, taking it to enter the this into account we will continue to consider medium to long term investments and increase production capacity to further expand our image sensor market share and the automotive sensor business, we expect to double sales in the current fiscal year compared to the previous fiscal year and we expect yourselves.
To continue to grow in a high level of the next fiscal year as well.
Lastly is the financial service segment to FY 'twenty, two cursory financial service revenue decrease a significant 24% year on year to 359 billion yen, mainly due to deterioration in the net gains and losses on investments in this separate accounts at Sony Life insurance operating income increase of significant 19 point.
1 billion yen year on year to $54 3 billion yen, primarily due to our reveal reversal of policy reserves at Sony life, resulting from the rise in interest rates during the quarter, Sony Life's new policy amount.
In force increased 57% year on year due to growth and our corporate business and strong sales mainly of the new individuals variable annuity Sovaldi Theres no change in the previous forecasts next fiscal year will be this fiscal year or the first mid term range mid range plan and it will.
Be an important fiscal year, where we establish a next mid range plan I believe that the most important theme in the next mid range plan as the Sony Group strategy for the further growth beyond the current tough.
Tough economic cycle and our next fiscal year, we anticipate that we will need to operate our business in the face of it.
Headwinds well each business will focus on responding quickly and decisively to the change. It was it faces. We also well steadily lay the foundation for the future. We plan to further evolve the diversity of our businesses and Humira associates, which are our strengths and hence the resilience of our portfolio and take on the challenges.
Of the creating new value in the gross market that concludes my remarks.
He said that the key note, we'd like to move on to Q&A session.
As we explained at the outset, that's where we're having Q&A sessions from investors analysts and from about a quarter. After five we'll be entertaining Christian from them here.
Those of you who have registered for asking a question in advance please connect dial or they designate a number and the feta ethics for antibody one those of you have questions in the room. Please raise your hand, and then wait until the microphone is brought to you.
Yeah.
Today, because the time time is limited I like to ask you to limit your questions to one per person.
Yeah.
No those of you if you have any questions.
Please indicate.
No online, but they spent b.
B of a securities silica assemblies.
Thank you very much he got cut off from your various securities about P. S. Five outside of the kitchen. He has five.
Seven point around media and getting it says I think significantly.
As the market consensus is about $7 5 million.
7.1 million.
If you can produce more you could have sold more of the demand where it's about at this level.
So this is Ed.
Three Q you have exceeding peers for so what is the current situation of the past five. Thank you for your question I would like to respond to your questions.
So it was a unit of $7 1 million units is not a bad figure at all.
However, the production and distribution.
Problem continued so that the products are not the delivery to the customer's sufficiently distribution channel.
Shop front the products are not the deliveries yet sufficiently so we need to streamline the operation and so that Oh did you need to deliver to the customers as promptly as possible. Therefore, the momentum of demand.
We are not concerned.
Whether we have to make sure that we get solidify the operation and we can deliver as many units as possible as quickly as possible. That's all thank you.
Thank you.
Thank you for your question.
Oh, let's go to the next question.
And once again Oh from online.
Morgan Stanley MSU are awesome.
Thank you.
Okay.
Congratulations auto some for assuming a new position.
And I have a question concerning games.
Three months ago.
On the you talked about some of the focused.
The games TPI is now gaining momentum I think and especially Miu the.
112 million that that's quite a positive are the ways.
Playstation.
There is a recovery in the quarter.
But as for the use of competitions are you talk about transition from Pierre spoke to peers pipe. So how do you focused are the transition stages of former pier sport to tier five or will it largely the.
The increase or what depending on the new titles.
And to boost the demand for a piece of pipe.
And I spoke to you a spike on the PS plus.
The paid member increase is might be a one of the main factors.
For the next quarter, that's almost as planned on the sport P. S. A b.
<unk> five are the sales increase and the promotional effect.
Should lead to the increase of the sales and the re up on that.
There are some play yourself, who her being away from the gaming.
That should be the reason so for us to see.
This current level of the user.
And as for P. S O five.
Dale or some reopening purchases all other hi.
And that should have a time lag to see the positive effect onto the figures so that might be because of the time lag for that membership and reflection on do the sales and the revenue.
And we'd like to continue to monitor the business the way youre going to solidify the software that you believe.
This was to enhance the engagement, we do use us for gaming. Thank you.
Thank you Dan I would like to move on to the next question.
Please raise your hand, if you have a question.
So then from the venue.
The person in the middle of this road.
Thank you very much Sakai from Daiwa Securities I have a question about the finance area.
And Oh financial services area. So the third quarter, a result update a new <unk>.
Contracts are was it as expected and also the interest of a transition how will it affect the pro forma so no sort of M. C. E V. A what was that a result and in addition for the next term.
Would be our plan for the change in accounting system and Oh at this.
Oh man what is your view on how this may affect the the performance now I would like to invite MS. Myself, that's a server to finance services related questions. Thank you very much for the questions. So about the of the new contract a value in the third quarter situation.
As your question and thankfully as I as mentioned in Mr. Total cases speech to Savannah is performing quite well and a new contract is increasing and therefore, the new contract. Our values is also increasing and that is the trend and that is.
Two.
Last for some time and also on interest rate shifts impact and Oh, we do have a hedging so there.
We don't expect any significant impact and.
Even if there may be some impact it would be very slight but depending on how the interest rate shift we need to look at the different spreads and also in particular the bank spread suddenly we'll be affected so in that sense, we would like to Oh, we will be increasing the profitability.
It is true that and I I thought S. Number 17 in regards to this accounting system change there would be another occasion for us to explain in more details about the ifr S. So please wait for that Oh occasion. Thank you.
It has to move on to the next question anybody.
Next online, but just spend all night Mizuho securities knocking assemblies.
Yeah.
Thank you very much.
Knock on their from Mizuho Securities.
Congratulation for the good results.
No I have a question regarding game.
Recently U S.
The U S Europe, and China macro trend is different.
In December.
Remember our results and our forecast for March.
And the forecast for next fiscal year I know it.
Business environment.
Hardware and software network.
By region.
What's the difference in trend is observed or no difference can you give me some hint.
That's my question. Thank you thank.
Thank you very much for your question game and network.
Globally.
The deceleration of the economy, there is a difference by regions, but how does that impact our business.
At this point in time by regions. There is no significant difference.
That's my recognition, having said that I'll tell you about a P S five share compare to peers.
In Europe.
As compared to the United States. It is high our position is higher so we are maintaining in high positions in the United States also in summer.
There was some narrowing of the gap, but more recently our share has expanded significantly.
So.
Impact.
It there's not much impact of the macro economy, having said that I'll tell you that this is something dynamic. So we have to watch carefully the situation from the fourth quarter onwards. Thank you.
Thank you.
Okay.
On the way, we'd like to move on to the next question.
On the online participant.
I have a son of JP Morgan Securities.
Thank you.
My name is <unk> of J P. Morgan.
On the fifth.
I have a question.
The based on your documents.
Q3 sales.
On the North American the smartphone.
Production, what's the constraint.
Thus for the Q4 wafer input.
That's almost on the same level over the previous fiscal year, but as for the capacity seems to be leather smaller compared to the previous speakers so that might be a decreasing factors. So will you have productions.
So what is your perspective for the North American market on the production situations. Thank you very much.
For the first.
Part of the questions are for the based on the customers' production are the changes.
The we had quite a minor impact on the ASP for Q4.
And we have yet to identify the exact kos. So we need to continue to monitor whats going on hospital capacity on the wafer input.
And actually until Q.
Q4, 90% is for the operating the.
The utilization rate that's for image sensor productions are related to changes.
In the basic specifically for industrial use seem to Kumamoto a plant that does support the others. So we are going to maintain the full fledged productions on the Q4 capacity seems to be a dropping but because of the plant on the maintenance and inspection.
And time is running out so we would like to take one last question.
Okay.
And those are.
From S. M D C Securities Mr cuts at all please ask a question Hello, I am cuts it out and congratulations Mr. Turkey.
No I have one question about the the market landscape and how you interpret the at the market. The situation. It's dynamic and are your competitors. Another Perez, Matt say that it's tougher than three months ago and Uh huh.
Our semiconductor business is doing quite well.
And based on this towards next year, what is your plan and also E. D. N S. I believe that the forecast is quite a tough and.
And I believe that you would like to take some measures.
Countermeasures and so I would like it to explain to US what you will do thank you for the question on overall economic landscape I think that's a question I believe last year.
And and conversion at the end of last year in particular, our European and U S economy mm Theres, an optimistic view that that they may be making a soft landing and I M. S. A forecast has been revised upwards manner and also the the echo.
The market financial market as a.
In the momentum it maybe recovering in advance to the the overall market recovery and so the the generally that maybe the tendency, but when it comes to the at a real economy and from the finance market Oh is a.
The changes comes into play so the first the fourth quarter and also they are early next fiscal year. They had a real economy and also the consumption trend are we need to be cautious to be prepared for any shifts and as far as that business is concerned are currently in the smartphone and.
Low end and a mid end are going down and the T. V's demand is weak.
And I mentioned that and.
I can say that and this is something that was foreseeable just certain extent so as far as we're concerned we think we are prepared but oh from the fourth quarter to the the the first part of next fiscal year, we are going to.
To the right our risk control and so we'll be prepared for the next phase in the next momentum and.
So we will not be left behind then when the next momentum our increases and that is the are the overall view at this point in time. Thank you.
Thank you very much.
Now it is time.
We would like to conclude the Q&A sessions for the investors and analysts now we would like to start did a quick.
Now I'd like to move on to entertain any questions from the media.
If you have any question in the whole. Please raise your hand those of you that's it.
Online if you are a Christian please press the <unk> followed by one.
In this whole thing microphone will be brought to you. If you raise your hand because of the time is limited I would like to ask you to limit yourself to one question per person.
No. If you have any question. Please raise your question.
No in the middle.
Foster road.
That's a shame yamazaki is my name.
Not directly related to earnings and NAV.
Isn't it.
Our semiconductor business I have a question.
In Kumamoto.
Bill you are considering building a new plant in Kumamoto, but is that kind of situation or are considering the plant in them Kumamoto. Thank you for your question.
Yeah.
It's not something that we have made an announcement of so this is based upon speculation that Iraq to refrain from making responding to the question, but generally speaking.
Image sensor market growth in the mid to long term and based upon that and.
Consideration for expanding the production capacity is always considered.
Not to limit that the specific location, but why today, we are considering that and if if there's anything that is decided then we'd like to inform you immediately thank you.
Okay.
I would like to move on to the next question next question. Please.
So in the center.
Yeah.
Two rows are from the plant.
From the left.
My name is so to me or the new home case Shimbun.
One question.
And as for entertainment.
Music and pictures.
What is your strengths of the conglomerate.
Centering around the entertainment business.
The macroeconomic situation has been improving.
Improving.
And that should be a driving force for you to maintain the good business performance our.
For the next fiscal year.
The IOL.
You are expecting further more solidification of their user bases.
So what is your strength in that environment. How you can takes a liberal it will be a copilot strength for that environment.
For the entertainment related to being a conglomerate.
And we May have you may have a conglomerate discount that.
That might be negative factors for you and it clearly, saying you discount discounting factors how are you going to minimize.
Those factors and how you should address to those.
The elements.
Thank you for your questions.
As to the strength of being a conglomerate.
We have the diversified businesses.
Diversified businesses.
Probably that they are not so closely related.
So.
All of those factors do not go alone at the same time.
So and that should be one of the strength for us to have multiple businesses. That's the same concept of the portfolio management hospital conglomerate discount or there should be many people are saying different things on that.
So I talked to in the presentation first for the entertainment three businesses. So we have the prompts media on the.
We have a quite strong synergy effect between the different.
Business serious on that that's almost visible.
Financial figures that we can expect some a good circulation.
The benign cycles hub for the bottom up the effects, so that should be another strength of ours.
And in addition to that.
We have the technologies Sony is a technology company that's.
One of our uniqueness is.
And how we can take the level of choke those technologies to entertainment business.
The metal bus should be one of the topics.
That's represented by the metals. So that's our activities for the new digital experiences entertainment that should be a core factors. So about my future business. Thank you.
Okay. Please raise your hand, if you have a question in the middle second row from the front.
Michelle I'm afraid as journalists about the inventory level at the moment for the other games and the electronics point of view and so when we think about the Oh the market I believe you may have to be conservative in our planning on the inventory level, So Uh huh Oh.
To analyze the do your inventory level from the perspective and for the the gaming.
Has a high level of inventory.
And we judge that a it can be mobilized and Oh. So what is your view on the inventory and thank you for the question. So I would like to shave.
At some information a statement about the inventory level and for the game and network service for this Oh third quarter. The cells are production Celsis Ah Ah is increasing that is why it is that the inventories building up significantly and even if there is to sell Sunday.
And for a long time, we were not able to deliver product smoothly. So me therefore increased our production capacity significantly and to produce the products and that we are in the middle of delivering this products and they've been gosh two D. The game and entertainment service.
We're not worried about the inventory level actually and the inventory level, when we think about the sales momentum.
So the P. S for so now it's the seasonality now that it's and of course here in the past with the stimulation and.
The inventory itself made a increase in the monetary value, but in comparison to the peers for the other product our unit price is much higher and it appears for we decreased the price and the force here and so on it so the monetary value seem.
It should be higher and then.
What actually is and when it comes to Etfs.
And previous briefing I mentioned that are the the inventory level at the end of the second quarter was rather high.
And we worked on the reduction of inventory and we manage to achieve our goal to certain extent, we are still working on it but it is however, slightly higher than our.
What we think is the appropriate level so into the this quarter and we would like to reduce the the inventory and for I N. S. S. A D. The capex optimization and also maximizing the the business of scale and for that matter.
We have taken a policy to have a high level of inventory as part of the investment and for that are the capex timing can be delayed and that's all thank you.
Yeah.
No anybody who has a question. Please raise your question.
Next but just an online I cannot guy sign from Reuters.
Second ACA from writers.
Game segment.
Makes sense and he made a comment I'd like to confirm this fiscal year.
Yes five.
Its target.
Yes.
1918, 19, you have a rate increase to 19, yes. It is 19 million units.
It was 18 million and we raised at 19 million.
$18 5 million.
When you say 18 and it is 19, so we have raised their target.
Thank you.
The time is running.
We're running short on wed like to entertain one last question.
Yeah.
On this row on the right the fifth from the plant.
Hi, My name is he mitre of Diamond.
Total Sam talked about.
Image sensor business.
You are going to enhance the production capacity.
And will it be all for the other applications from mobile.
Thank you for your questions that includes the other products.
Mobiles.
How about the mobile image image sensor products.
Driving force for the most of the growth, but we have some other segments as well. Thank you.
So at this time for us to have Sean the session.
This concludes.
Today's the consolidated financial result announcement.