Full Year 2024 Sony Group Corp Earnings Call
Thank you very much for coming to attend this meeting despite of your busy schedule now.
To start turning great corporations corporate strategy and the earnings announcement presentation 2025.
Speaker Change: I'm going to serve as N C. My name is easy from PR Department. Thank you very much.
First.
Speaker Change: I would like to invite <unk>, President and C. E O of Sony Group Corporation, Mr. Total kit.
Speaker Change: He will be talking about the corporate strategy for Sony Group Corporation.
Speaker Change: Then I will invite Mr. Tao and Mr. Yamato there'll be talking about FY 'twenty for earnings and results and FY 'twenty five results forecast and then after that we are going to entertain questions. We're expecting the total of 90 minutes to complete the <unk>.
Speaker Change: Entire session that accompanies the floor is yours.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen, thank you very much for coming.
Speaker Change:
Dave first I would like to talk about.
Speaker Change: I'd like to first take a mid to long term Luca Toni groups business and our overall strategy direction over the last several years, our business direction has shifted significantly towards entertainment the decision to lean more heavily into this space was driven of course by the strength and growth of our entertainment business is but it also.
Speaker Change: It's driven by the power of entertainment dilute people and to feel the world with emotion, which is of course at the heart of Saudi group's purpose.
Speaker Change: In recent years, we have leaned heavily into extending content in each categories such as games music film a D V program.
I b expansion across our various businesses strategic investments in content to music catalogs high growth areas, such as <unk> and the development and use of innovative technology sits aboard creation.
Speaker Change: All of which has been transformative for the study group and it has led to very strong results disclosed today.
Speaker Change: Looking at those reserve it is worth noting that our entertainment business accounts for roughly 61% of our consolidated sales and we have seen the resilience of entertainment business is doing economic downturn like during the COVID-19 pandemic.
Speaker Change: Our efforts led to David content and creation technologies are working steadily.
Speaker Change: And our priorities and commitment to grow these categories remain unchanged.
Speaker Change: Building on our momentum and results to date and working with a laser like focus to realize our long term creative and to David vision will be at the core of our corporate strategies moving forward.
Launched last year, a longtime creative entertainment vision illustrates how we want to deliver condo as your creativity and technology.
Speaker Change: Our vision of a future that will create infinite realities, together with creators, but instead employees and sue synergies among our various businesses.
Speaker Change: Let's take a look at the edge of David businesses that will be integral to making a creative entertainment vision a reality.
Speaker Change: First the game and network services segment, which is doing extremely well expansion a playstation five both of the number of active users and per user spend is expected to continue to drive steady profit.
Speaker Change: As we look ahead.
Speaker Change: We will seek to capitalize on our momentum to drive sustainable profitable growth and invest thoughtfully to create the future of play.
Speaker Change: We expect to see stable growth in revenue and profits from network businesses due to the growth of monthly active users corresponding to the further and steady expansion of the store base, specifically, we will seek higher revenue above its rob.
Speaker Change: Playstation plus and maximize Abu <unk> average revenue per user of pay station store to the personalization at by pricing optimization in this fiscal year, we anticipate further growth in studio businesses do a broader use they use is user base to AI driven by edge.
<unk> titled largest hub narrative based single player titles like Ghost of Yo Day, and live service games, such as marathon as well as continued success of already launched catalog content and ongoing live services titles like Hell divers to a destiny two.
Speaker Change: We also plan to focus on stronger profitable peripherals, such as Playstation portal, where all our recently introduced basic cloud streaming feature allows users to enjoy the games on the go more easily.
Speaker Change: In the music segment, we remain focused on strengthening our position in the global music market welcome Judy to improve profitability.
Speaker Change: They tell you struck relationships with digital streaming platforms studied music group has had great success and has a as core business value proposition, which acres repertoire centers in major markets around the world robust label and Baidu services.
Speaker Change: <unk> tailored service do a debated RJ said DIY distribution and music publishing.
Speaker Change: In FY 'twenty for our music business in Japan, notably enjoyed great success in bringing Japanese artists such as U S O b to the global market Atlantic continued to build on this every area.
Speaker Change: As we look ahead in this segment, we plan to continue to strengthen these important ecosystems and focus on growing organically and via deliberate acquisitions throughout our business added high growth market, such as that Nebraska Idiot other Asian countries.
Speaker Change: Exploring additional strategic investments in key areas of business as well as music catalogs to expand revenue opportunities and increase asset value.
Speaker Change: Discovering and nurturing talent as well as building and strengthening relationships with local independent labels and artists to it has a presence.
Speaker Change: Servicing fans, who passionately support specific artists and content.
Speaker Change: And extending IP, Andrew by up to die upbeat biopics antibody documentaries evolving Saudi music artists as well as live events and finally, we will continue exploring the use of cutting edge technology, such as AI in ways that create value and also protect the rights of ideas.
Speaker Change: The visitor industry overall continues to recover from issues such as the COVID-19, and strike related shutdowns over the last few years, which impacted the number of film and TV productions.
Speaker Change: I feel business are like the rest of Hollywood continues to rebuild from these events and has some new titles on the horizon as was presented at the Best reason recent cinemark an event in 'twenty to my basic Sony Pictures Entertainment expected.
Speaker Change: You see the release of the latest Spider Man movie Spiderman brand, New day, as well as new film adaptation other cap called Gabe resident Evil and then they just jumanji film, we expect strong Ivy lineups to continue including the final film is the Spider verse animated trilogy.
Speaker Change: In spite of bad beyond despite adverse in 2027 and the Beatles are fulfilled.
Speaker Change: Cinematic event directed by Sam Mendes with exclusively hit theaters is.
Speaker Change: 2028.
Speaker Change: And it is also expected to be a significant growth driver for the picture segment as the enemy of focus streaming service cloud you will surely expenses paid subscribers and services.
Speaker Change: But more broadly as we look ahead, we see S. P E as a central hub for many of the city Jed and synergistic Cross company collaborations that are central to our creative entity bid vision.
Speaker Change: And we said, yes, we have seen the value add potential well executed cross business collaboration across the Sony Group companies. Examples include Playstation productions adaptation of our steady game I be such as uncharted add the last of us to film and TV with over 10 titles.
Speaker Change: Lee and production.
Speaker Change: Or are the many collaborations among study music ideas and other businesses add about Ah study technologies and many of our creative businesses.
As we look ahead, we will lead into broader collaborations in anyway, and do our engagement platform initiative, we will aim to create opportunities and synergies by connecting fans communities within and outside sunny across various entertainment sectors and in a location based.
Speaker Change: And David effort.
Speaker Change: Anime and continues to be a major area, which leads the growth for the Sony group across many parts of our business at the heart of everything is animes vibrant creator and found communities, which crunchy role will be celebrating later this month at its 20 twenty-five crunchy role and he May awards in Tokyo on the 25th.
Speaker Change: <unk>.
Speaker Change: Building on our already successful any perks and crunchy role businesses. We have moved forward with several initiatives over the last several months to expand our reach in anime and strengthen content development, including an upcoming anime series adaptation of Sony Interactive Entertainment hit IP.
Speaker Change: Ghost of Sushi Malaysians to be produced in collaboration with Playstation productions on Eplex crunchy role and Sony Music Entertainment.
Speaker Change: The establishment of higher to Inc. A company jointly funded by unemployed and cruncher accrual to plan and produce high quality anime, where works for global anime fans of strategic capital and business Alliance form with Cologuard cooperation to promote further.
Speaker Change: The media mixes and global expansion of both companies IP and an establishment of a strategic partnership with brand Mundine Umpqua Holdings, Inc, and web three startup Goudy, Inc.
Speaker Change: And as we look ahead the industry's market size, it's expected to continue growing at a CAGR in the high single digits from 2023 to 2030, especially was there any may streaming market, which is crunchy roles core business.
Speaker Change: And that is expected to grow at a CAGR in the high 10% range by 2030.
Speaker Change: In this market environment. We also plan to further accelerate crunchy rules growth by enhancing service offerings and acquiring users.
Speaker Change: Our strategy is to broaden services offered to anime fans Inc.
Speaker Change: Which include e-commerce for anime merchandise, a mobile game Library service and my manga offerings.
Speaker Change: To further expand crunchy rules user base, which has now grown to over 17 million paid members as of March 31st 2025.
Speaker Change: We are closely collaborating with Playstation network, which has the largest monthly active users in the Sony group.
Speaker Change: Specifically since February new customers and renewing customers can smoothly and register for crunchy roles paid services from P. S. Five which we expect to contribute further increases in paid membership.
Speaker Change: We will leverage Playstation network monetization capabilities to enhance crunchy role service.
Speaker Change: This back end integration as part of the engagement platform initiative, we introduced last year, which aims to create business opportunities and synergies by connecting diversifying communities, both within and outside Sony across various entertainment sectors.
Speaker Change: Based on our robust network infrastructure, a Playstation network, we will utilize core backend functions such as payment data infrastructure and security across various network services within the Sony group aiming to build a new platform that connects users and creators by meeting fans.
Speaker Change: Interests and desires.
Alongside strengthening fan engagement, we also plan to enhance the development and operation of a common infrastructure that can be utilized across the Sony group for better monetization.
Speaker Change: This will allow each company within the group to focus resources on enhancing competitiveness and differentiation in their respective businesses aiming for business growth through expanding and deepening customer engagement.
Speaker Change: Looking further into the future we are at early stages and exploring the potentials of L. B E to maximize the value of the IP across various entertainment sectors.
Aspirational across business collaborative efforts to date that merge IP and technology to create new experiences of all is illustrated the growth potential for future.
Speaker Change: Up to this point I have discussed growth and strategies within our entertainment businesses, but our innovative technology is also critically important for realizing our creative entertainment vision.
Speaker Change: In the entertainment technology and services segment, we have shifted the focus of our business towards those that create content.
Speaker Change: Building on the success of Alpha we are expanding our imaging ecosystem as a growth driver.
Speaker Change: This includes broadening offerings of tools and solutions for Cinematographers live streaming and remote work flow for industry, leading creators and image authenticity technologies for news agencies.
Speaker Change: In addition, we also plan to continue to focus on technologies and growth areas such as sports Entertainment.
Speaker Change: We acquired.
Speaker Change: King trucks last year to enhance our capabilities to utilize existing sports data I call guys officiating N play analysis, and we plan to continue to expand alternative broadcast through sports sports data and real time content creation technology that enhance fan engagement and attract new.
Audiences.
Speaker Change: To support the leap and entertainment. We also plan to continue to revolutionize content creation technology.
Speaker Change: Key solutions include special content creation support system.
Speaker Change: X Y N and real time V F X and a 360 virtual mixing environment, which is now expanding into sound creation for films games and animation.
Speaker Change: Furthermore, in the imaging and sensing solutions segment, we expect the image sensor as a key device, we're capturing the real world to enhance the accuracy of content creation and elevate the reality of entertainment experiences to the next level.
Speaker Change: For mobile image sensors, which is the pillar of the business, we're expecting the ongoing trend towards larger sensor size to continue for the coming through years.
Speaker Change: The demand for further evolution in image sensor performance, such as resolution noise reduction dynamic range and power consumption remains high.
Speaker Change: We will work to introduce a new generation process in order to accommodate the production of such innovative sensors.
Speaker Change: Combining this nextgen a generation process with sensors, such as the two layer transistor pixel stacked three star we plan to continue delivering more value added differentiated sensors, thereby meeting our customers' expectations as we aim to have for further growth of the <unk>.
Speaker Change: I N S. S business in these ways, a major challenge will be controlling the necessary capital investments at an appropriate level and enhancing investment efficiency.
Speaker Change: To this end we plan to explore a range of options beyond the mobile sensor business. We plan to continue generating stable profit through cameras and sensors for industrial equipment, and social infrastructure for businesses with future growth potential such as automotive sensors. We aim for a mid to long term growth and optimal developed.
Speaker Change: <unk> costs and frameworks, while carefully assessing the speed of market growth and business potential.
Speaker Change: In conclusion, the diversity of our business.
Speaker Change: And our people will be of Paramount importance importance and realizing a creative environment vision Sony.
Speaker Change: Sony has about 110000 employees actively working in various companies and organizations around the world, creating an environment of diverse and very view viewpoints ideas and strategies.
Speaker Change: The synergies generated by organically connecting diverse businesses and people are the source of Sony's unique competitive advantage.
Speaker Change: As we look ahead, we will continue to evolve unleash the creativity of creators and strive for world of infinite realities entertainment and excitement.
Speaker Change: Thank you very much.
Speaker Change: As it was.
Speaker Change: The presentation by Turkey, and now with that to proceed to earnings announcement.
Speaker Change: No need to begin to FY 'twenty financial results and FY 'twenty five.
Speaker Change: Financial results forecast.
Speaker Change: Allow me to introduce the executives on stage.
Speaker Change: Sony Group.
Speaker Change: Isn't N CEA.
Speaker Change: Yeah, Keith the Turkey.
Speaker Change: Executive of Associate Bo Linn Tao.
Speaker Change: Senior Vice visit.
Speaker Change: Said the school Hayakawa.
Speaker Change: Yeah.
Speaker Change: Sunny financial group.
Speaker Change: Our corporate Executive Officer CFO.
Speaker Change: As they get Oyama down.
Speaker Change: Our first visit to Turkey. Please.
Speaker Change: And now we like to be ceded to exceeding our earnings result, and forecast an impairment after.
Speaker Change: Linda and cause ETA Yamato will be presenting.
Speaker Change: And Intel has become CFO of our group from April the first please.
Speaker Change: Thank you very much.
Speaker Change: Consolidated sales, excluding the financial service segment for to FY, 'twenty fault, where 12 trillion 43.9 billion yen and operating income was one trillion $276 6 billion yen both record highs.
Speaker Change: Operating cash flow was one trillion 972 point full billion yen, primarily due to an improvement compared to the previous fiscal year year on year in the working capital of the G. N N S. N I N S. S segment's consolidated sales, including the financial service segments were 12 trillion 957.
Speaker Change: 1 billion operating income was one 2 million and $407 2 billion and net income was one 2 million 141.6 billion yen the results by sentiment for FY 'twenty for Us Sean here.
Speaker Change: Today at a meeting of our board of Directors, we approved the plan for the execution of the partial spin off of our financial service business person to disapproval. The financial results of the financial service business during the current fiscal year until the execution of that enough.
Speaker Change: Will be classified as a discontinued operation in our consolidated financial statements at the time of execution of the spin off in October an accounting treatment will be carried out to exclude the financial service business from consolidation and at the assets and liabilities of their financial service business will be separated from the <unk>.
Speaker Change: Elevated statements of financial position after the execution of the spin off net profit and loss of the financial service business will be recorded as operating income.
Speaker Change: Operating income or loss in continuing operations in the accordance with the equity method in light of this the results forecast for FY 'twenty five will be presented for continuing operations only and it results forecast for Sony Financial group will be disclosed at our earnings announcement before the execution of the spinoff in at Sony F. G.
Speaker Change: Geez earnings announcements after the execution of spinoff.
Speaker Change: As we announced in our disclosure rig.
Speaker Change: Regarding the SPN startup preparation for the spin off in February of last year at the time of the deconsolidation of the financial service business, we plan to carry out and according to the accounting treatment in accordance with the international financial reporting standards to transfer in one lump sum the accumulated other comprehensive income of <unk>.
Speaker Change: The financial service business recorded in the equity section of the consolidated statements of their final push into the profit and loss of the discontinued.
Speaker Change: Discontinued operation accumulated other comprehensive income for the financial service business as of the end of the past eight quarters has been trending as shown here. Although it is expected to fluctuate to a certain degree going forward an accounting loss is expected to be recorded in the discontinued operation based upon the account recorded at that time, obviously not.
Speaker Change: This accounting treatment is merely a transfer between line items in the equity section of the consolidated statement of their financial position does not impair total equity and it has no impact on the profit and loss of the continuing operations or our Cashwell. Moreover, this transfer isn't up counting.
Speaker Change: It meant pertaining to the consolidated Sawhney.
Speaker Change: That results from the deconsolidation of their finances. So this business and has no impact onto the consolidated financial position of Sony Financial group for more details. Please refer to the materials regarding the spin off disclosed today.
Speaker Change: Now I will explain our full ear results forecast for the continuing operations for FY 'twenty five before ear forecast itself of elegant drilling several hundred billion and operating income of one trillion 380 billion yen before reflecting the impact of any additional U S tariff.
Speaker Change: Now I will explain the impact of a U S tariff policy.
The situations are running around additional U S tariff is changing daily and the future is uncertain, but G. N S E T and F N I N S. S segments, which are currently expected to be impacted are responding quickly to the additional tariffs that have been already being implemented and are considering.
These pauses to multiple possible future scenarios.
Speaker Change: Under the tariff rate E. We assumed we expect to be able to manage the impact on profitability of our continuing operations reduce physical ear.
Speaker Change: To approximately 100 billion yen or less than 10% of the operating income forecast. We just showed by stockpiling of strategic inventory in the U S. Adjusting product shipment allocation on a global basis, raising price on certain products with an eye on market trends and other means.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: And we plan to continue to closely monitor the situation and take appropriate measures and we expect to provide an update on the impact of our financial results at our first quarter earnings announcement in early August the FY 'twenty five forecast for operating income of continuing operation incorporating this impact is flat year over year at one.
Speaker Change: Trailing 280 billion, while net income is expected to decrease 30%. The team presented to 930 billion yen, primarily because the valuation gains on equity securities and the decrease in tax expenses, we recorded in the previous fiscal year will not reoccur well forecast for the operating cash.
Speaker Change: <unk> is one trillion 240 billion yen, primarily due to a normalization of the working capital N. G. N S, resulting from the significant improvement in the previous fiscal year, an expected increase in margin picture production cost the forecast for each segment is shown here now I will move to the.
Speaker Change: Move on to provide an overview of each business first one is a G and N S. If I sell FY 'twenty four cells increased 9% year on year two of four trillion 670 billion yen, primarily due to an increase in third party software sales and the impact of falling exchange rate the operating income increased 43%.
Speaker Change: Send ear on ear to a 414.8 billion yen a new record for the segment due to increase in all categories, except for first party software.
Speaker Change: User engagement in the FY 'twenty four fourth quarter continued its strong momentum with the number of monthly active users across Playstation in March increasing 5% compared to the same month of the previous year to 124 million accounts in.
Speaker Change: Third party software and network services revenue increasing ear on air.
Speaker Change: Our full ear forecast for FY 'twenty five as sales of 40 million 300 billion yen, an operating income of 480 billion yen.
Speaker Change: The in addition to their stable profit growth for the platform business from the extended user base. We expect the major first party titles scheduled to release this fiscal year to contribute to sales and profit.
Speaker Change: To respond to the recently adopted a U S. Tariffs, we have been making preparations such as diversifying P. S. Five hardware production sites and stockpiling inventory in the U S and we expect to implement additional measures at the appropriate time after assessing any changes in these situations going forward.
Next is the music segment FY 'twenty four sales increased 14% year on year and two one trillion $842 6 billion yen and operating income increased 18% to 357.3 billion yen a new record high for the segment.
Speaker Change: On a U S dollar basis, the growth rate of streaming revenues for FY 'twenty for increased 5% year on year in recorded music and 13% in music publishing.
Our full year forecast for FY 'twenty five is sales of luxury and 850 billion yen, an operating income of 355 billion yen.
Speaker Change: Primarily due to the negative impact of Forex, we expect operating income for the segment to be essentially flat year on year, but we expect the operating income of Sony Music group, managing our overseas music business to grow in the high single digits on a U S. Dollar basis next is the pictures segment.
Speaker Change: Despite a decrease in sales a TV production FY 'twenty four sales increased slightly year on year to one Chilean 505.9 billion yen, primarily due to Forex impact operating income was essentially flat year on year and well have just $17 3 billion yen primarily Ed.
Speaker Change: Due.
Speaker Change: Do a back of the lowest sales and as Nate maybe offset by a positive impact of Forex a full year for our forecast for FY 'twenty five and sales went to in the 500 billion yen operating in 125 billion again expect operating income to grow approximately 10% year on year on a U S dollar basis.
Speaker Change: Excluding the impact of Forex and primarily driven by <unk>.
Speaker Change: Next is the E T N S segment.
Speaker Change: FY 'twenty four sales have decreased 2% year on year due to jewelry and 409.3 billion yen, primarily due to a decrease in unit sales of televisions and smartphones.
Speaker Change: And despite the impact of a sales decrease and additional restructuring charges in FY 'twenty for Q4 operating income increased 2% year on year to 199 billion yen, primarily due to operational expense reduction.
Speaker Change: The interchangeable lens camera bucket performed well in FY Q4, FY 'twenty for Q4, basically the Chinese market, which benefited from subsidies a good a box with a 9% year on year on a unit basis.
Speaker Change: I feel your forecast for FY 'twenty five is says up to 280 billion again, an operating income of 180 billion yen.
Speaker Change: This fiscal year, we plan to operate our business conservatively prioritizing risk mitigation, because we anticipate disruptions to market and supply chains by recently adopted U S tariffs.
Speaker Change: Next is I N S. S segment, FY 'twenty voice sales increased 12% year on year to one Chilean and 799 billion yen, primarily due to the impact of Forex and a great sales above our sensors.
Speaker Change: Despite a decrease in manufacturing expenses upgrading H M increased 35% year on year to 261.1 billion yen, primarily due to favorable impact of Forex the benefit of increasing sales and improved manufacturing yields both sales and operating.
Speaker Change: Again were at record highs of the segment.
Speaker Change: Customer demand remained strong in FY 'twenty for Q4 and design is what do I do do I have my 2025 miles are progressing smoothly.
Speaker Change: Our full year FY 'twenty five forecast is sales of what drew you to hedge at 60 billion yen had operating income of 280 billion yen.
Speaker Change: And if we identify we expected gave growth in sales and profit primarily due to an expansion of Bubba sensor sizes. Despite expected depreciation of the yen had bad Ed to FY 'twenty four.
So far we have not seen any changes in our customers' order prospects due to additionally, U S tariff impact.
Speaker Change: Next is the financial services segment financial services revenues for FY 'twenty four decreased $838 6 billion year on year on year to $931 4 billion yen, primarily due to a decrease in net gains on investments at Sony life operating income decreased.
Speaker Change: Greece 43 billion year on year on year to 130.5 billion, primarily due to the recording of a gain from the transfer of a portion of the shares of Sony payment Services, Inc. And the fiscal year ended March 31st of 'twenty 'twenty, four and a decrease in profit related to minimum guarantees for variable life insurance at Sony life.
Speaker Change: Due to market fluctuations in FY 'twenty four.
Speaker Change: Sony Life's new policy amount in FY 'twenty, four increased 11% year on year, continuing its steady growth.
Speaker Change: Next I will explain Sony financial group's FY 'twenty five forecast.
Speaker Change: Starting with this announcement in view of the financial services revenue. We had before we are disclosing operating revenue excludes excluding a portion of gains on investments as our sales metric.
Speaker Change: As for profit metrics in lieu of operating income we are presenting income before income taxes and adjusted net income, which is net income excluding unrealized gains and losses due to market fluctuations gains and losses on sales of securities and other one time.
Speaker Change: <unk> and losses.
Speaker Change: Of the profit metrics, we have established adjusted net income as the most important key performance indicator because we believe it more.
Speaker Change: More appropriately reflects the profitability of our business, who is why 'twenty four 'twenty five we expect operating revenue to be one tool Union adjusted net income to increase 46 billion yen, Iran. Ear $207 5 billion yen and income before income two degrees 770.8 billion yen year on ear.
Speaker Change: 60 billion yen during our current fiscal year in order to strengthen Sony life's financial position, which we have been working on and have to delve deeper and make significant progress reducing risks, resulting from policy cancellation, we plan to replace the yen denominated long term bonds and reinsured a block of our U S.
Speaker Change: Dollar dominated whole life insurance policies, which have a high capital load as a result, we plan to sell surplus U S. Dollar denominated bond to US is to cover our declining insurance liabilities and income before income taxes is expected to decrease significantly for the next two years, mainly due to the impact of gains and <unk>.
Losses on these sales this series of measures like is expected to significantly improve the ratio of duration matching of yen denominated assets and liabilities, which account for the majority of our balance sheet significantly reduced policy cancellation risk of this associated with the U S nominal dollar dominated insurance and.
Speaker Change: These are level of ESR to a certain degree driven by factors such as an increase in the new policy amount Sony Life's adjusted net income is growing steadily and distributed distributable amount, which leads to shareholder value are expected to remain stable in preparation for the spinoff and listing we will hold a financial services Investor day.
Speaker Change: A may 29th in addition to providing more detail on the measure measures, we're improving our financial position that we explained today, we plan to discuss Sony F. G strengths business plan and the listing structure for the spinoff. So please watch it finally I would like to explain the progress of our our fifth midrange plan a key performance indicator indicators.
Speaker Change: For the entire group and as MRP.
Speaker Change: Growth rate of operating income or a continuing operation of 10% or more and a three year cumulative operating income margin of continuing operations of 10% or more in FY 'twenty for a G. N N S. N I N. S. S segments were the main drivers of profit growth leading to overall operating income growth of <unk>.
Speaker Change: 83% year on year, and operating income margin of 10, 6%, giving us a very good start at the first fiscal year of the MRP. The full year operating income forecast for FY 'twenty, one five which incorporates the impact of tariffs. It is that we presented today shows a two year accumulative average.
Speaker Change: Growth rate of 11% on operating income margin of 10, 8%, although the environment remains uncertain. We believe that we are on track to achieve our targets regarding capital allocation for the period of the current M. R. B, we have revised our forecast our cumulative three year operating cash flow, which is our main source of capital from the initial plan.
Speaker Change: On a 4.5 trillion yen the $4 eight trillion yen taking into account the results of the previous fiscal year. We have made strengthening shareholder returns a priority for the MRP. So we intend to use the current increase in Allo Keto Bowl capital for greater shareholder returns for FY 'twenty five we have established a 250 billion yen.
Speaker Change: Share buyback facility and aim to increase the pace of our increase in dividends raising the annual dividend by five yen per share year on year. After the stock split to twenty-five yen per share.
Speaker Change: Our strategic investments budget of $1 eight trillion in capital expend teachers budget of 1.7 trillion remain unchanged from the original plan given the that the business environment is uncertain, including the impact of additional U S tariffs and it concerns about a global economic slowdown going forward, we plan to operate our business this fiscal.
So year under a cautious and conservative assumptions, if there were significant changes in the business environment going forward, we plan to swiftly and flexibly revised our capital allocation plan. We have presented this time that is all for now thank you.
Speaker Change: So that has been their briefing from telephone enamored iPhone.
Speaker Change: So add.
445, we'd like to start the Q&A session for media and then maybe around five to 10, we are going to solicit questions from the investors and analysts we are expecting 20 minutes for each section.
Speaker Change: For online distribution.
Speaker Change: You know some of you who have already registered the questions. Please.
Speaker Change: Click the link to participate on the webinar.
Speaker Change: And regarding how to raise questions and some housekeeping announcements please refer to the information.
Speaker Change: We shall we have already sent to you. So please be patient until we wish them. Thank you.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: It's a bit too early but we'd like to answer to the question is coming from the media.
Speaker Change: People, who are joining from online. If you have questions. Please go to web E X screen and raise your hands button and if you have questions from this room. Please raise your hands physically.
Speaker Change: And in this room are please make sure that you use a microphone.
Speaker Change: Please give up to two questions maximum.
Speaker Change: Okay. So if you have any questions. Please.
Speaker Change: Okay. So from this book clean.
Yoshida: I am Yoshida from Nikkei newspaper.
Speaker Change: I have two questions. The first question is it a question to total kissam more entertainment of or the fusion of the entertainment businesses have been ongoing and also trying to have their lives shooting of the the game and also the animation is also booming well for each segment are the speed of the <unk>.
Speaker Change: Collaboration or Atlanta, amongst the different segments within this entertainment how do you see that progress and also a cost of two Cmos. The first party animation for his party game animation this ease and maybe one significant milestone.
Speaker Change: So yes.
Speaker Change: For the future.
Speaker Change: How many animations you are going to goose and also if you have any business target to the Ob disclose a bold. Please and next question is to telephone 100 billion yen is your impact for the additional tariff and semiconductor has not been changed but those are 100 billion yen.
Speaker Change: In the major segment, what kind of businesses are included in this 100 billion yen impact and also into the future maybe there are some.
Speaker Change: Factors for fluctuations such as Forex.
Speaker Change: Or what kind of a valuable factors, you're assuming for this impact.
Speaker Change: Yes.
Speaker Change: Thank you. Thank you very much to the first question the synergy of the entertainment businesses. You talk about you asked me about the speed since of the speed well I think I, yes, we have been accelerating the project why this.
Speaker Change: This is because yes, it was a top down direction. So for the entire group direction. We are trying to move with these project, but now we are making bottom up to produce different projects. So now we are on this phase which is the most important element as a business management and what we can do is trying to set up.
Speaker Change: The environment, So we'll synergy.
Speaker Change: Is only produced from the bottom up approach. So once we start to see multiple project based upon the bottom up approach that would be the desirable and that'll be the source of competitiveness.
Speaker Change: Well, yes in terms of the acceleration I'm sure that we are going to be able to accelerate N O close age business has to be strong and each segment has to have a good materials of a good production projects. So each segment has to be stronger of course.
Speaker Change: And regarding the automation I think that is not just limited to the animation, but right now over 10 titles are we already made them to the TV programs and also to the movies of films and do the piece. We are now producing those are pieces. So the pipeline is growing.
Speaker Change: To be bigger and that is really important.
Speaker Change: Please yes regarding the tariff Oh, let me answer to that question 100 billion yen impact have been Oh.
Speaker Change: It's assuming the official tariff rate, which has been announced and hardware.
Our hardware business is included in this are in terms of our portfolio of G. N. S gained and also a T N S.
Speaker Change: In I N S S.
Speaker Change: Semiconductors, so those three segments.
Speaker Change: We are Chile are incorporating on par basis from these three.
Speaker Change: Businesses in terms of the tariff.
Speaker Change: We are not just simply calculating the simple tariff to come up with 100 billion yen, but thinking about the currently available information and also looking at the market trend. We may pass on to the price and also a shipment allocation. So we are taking a different measures.
In managing a to come up to the 100 billion yen impact. That's what we are thinking. Thank you very much maybe to add well the 12th of me U S has additional tariff reduction for China, maybe there's a 100 billion.
Speaker Change: Not reflecting that the tariff reduction between China and U S.
Speaker Change: Next question please.
Speaker Change: Those have questions. Please raise your hand.
Speaker Change: The person in gray.
<expletive> over here is this.
Speaker Change: Yeah, Melissa arenas writers have two questions.
Speaker Change: To Mr. Dickey.
Speaker Change: The first is about L. B E location based entertainment and the outlook I at this he is and the.
Speaker Change: I'm in today and enjoyed the immersive entertainment them, but the L. B E M.
Speaker Change: I think they are temporary mostly in the past, but how will this evolve in the future. What is aiming what is Sony aiming to achieve reserve ended image technology and I. Thank them. This it will be a showcase them I did contact point with the consumer and I think it's very important to that.
You promote L B E. So I E.
Speaker Change: Wondering whether you have more permitted it'll be he's instead of one time or temporary so what is your outlook. If any please share that with us and the second if I may.
Speaker Change: The second question is about the creation of new businesses at Sony.
Speaker Change: There's so many acceleration platform.
Speaker Change: Which is being promoted Joe for it to create new businesses and what is the outlook of the outputs outcome and what is your expectation going forward. Please.
Speaker Change: Thank you for the questions first about L. B E.
Speaker Change: Well to be honest, we are still searching.
Speaker Change: For a different possibilities them, but and we are doing a lot of attempts and not just in Japan, but also overseas.
Speaker Change: Oh well we.
Speaker Change: Take certain risks is M cases, or it could be that as a licensor and.
Speaker Change: We do and use.
Usually the license.
Speaker Change: The L. B E simulator types of experiments so that is what we're doing right now however.
Speaker Change: As for myself as you say rightly.
Speaker Change: In order to expand our IP. This L. B will be a very effective tool and it goes beyond generations. I think we can come up with a vague sense people of old generations would love because there's going to these events with it with family is something that we should be pursuing but.
Speaker Change: We cannot leapfrog and for example think of something like a theme park I'm investing in creating a feedback on our own we're not thinking of any such thing and in order to reach that level, we have to think of which pathway to take and we have to think about the optimal pathway. We also.
So I try to verify this.
Speaker Change: <unk> together.
Speaker Change: Together with partners different part is we have to work on this so we are searching for research collaboration right now.
Speaker Change: And in regards to creating new businesses.
Speaker Change: Our recent outcome.
Speaker Change: 'twenty 'twenty four from April.
Speaker Change: City at Sabre technology, and there is this device to cool down your body and a well is very hot in the summer. These days. So does this device itself is increasing as sales year on year. So as a business is already been established.
Speaker Change: Good.
Well this week I received the report that they are right.
Speaker Change: Their sales so I'm looking forward to the future S. A b well.
Rather to incubate it on its own.
Speaker Change: It trying to offer to companies 80 to become clearer and to do it incubate incubation and provide the hardware tools do they incubation so to saturate initiatives, both inside and outside our study we want to create new businesses. If we could do that that would make us very <unk>.
Speaker Change: Thank you.
Speaker Change: Any other questions.
Speaker Change: And the Central Center block.
Speaker Change: Our second from the right person in the very front row.
Corn is okay from sung Kay Shimbun, I wanted to ask about strategy to Mr. Total key.
So based on Trump tariff automobile manufacturers.
Speaker Change: Manufacturers and electro electronics electricity manufacturers are shifting to a manufacturing producing in the U S well.
Speaker Change: The business model I think it's going to change going forward. Sony I think has already started to started doing this in inter entertainment segment are you are thinking of.
Speaker Change: Producing a in the U S. For example, locally.
Speaker Change: Now, even though you don't become a platform or you may have oh, and if it's a good I P O.
Speaker Change: So maybe that might be very beneficial and advantageous to you I. Thank you for the question is producing a manufacturing locally.
Speaker Change: In the entertainment it rather than saying for entertainment segment, a segment I want to look at it from the hardware segment and the software segment and an entertainment gaming like Skol soles. These hard wears.
Speaker Change: Of course can be produced locally.
Speaker Change: I think that would be an efficient strategy.
Speaker Change: But P S five ish.
Speaker Change: Is.
Speaker Change: Our being manufactured in the <unk>.
Speaker Change: Many areas, whether it's going to be may are manufactured in the U S or not.
Speaker Change: It needs to be considered going forward. We're not are in such a critical situation in the entertainment segment, especially content creation.
Speaker Change: Ah recently.
Speaker Change: In the movies well, Mr. Trump is saying that he's going to.
Speaker Change: Have 100% tariff on films, which are not produced made Ah in the United States. So that was announced but that is still pending apparently so these are some of the movements. So that we need to consider.
Speaker Change: Regarding entertainment, we if you take our films are pictures for example.
Speaker Change: Of course, our locations are being made in various areas and it is all put together.
Speaker Change: The story and they're all pictures that are.
Speaker Change: Filmed outside of the U S. Because the Hollywood cost has gone up a skyrocketed. So it's not so much a U S. A.
But rather it's an issue that is specific to the state of California. So for content and we don't know how it will evolve.
Speaker Change: So we are I'm paying attention close attention to the the trends now, whether we're going to become a platform or or not.
Speaker Change: As I explained a today crunchy role itself is a platform.
Speaker Change: And as I E Playstation.
It is a a giant platformer for games so.
Speaker Change: We are general contents.
Speaker Change: We don't do general contents of production, but we do have several platforms. So how can we string strengthen that and expand that I think that will be an important topic going forward.
Next question please.
Speaker Change: Okay.
Speaker Change: So the central block.
Speaker Change: The person on the right hand side. Please.
Tia: Thank you Tia from us like a newspaper.
Speaker Change: I have two questions two total case on.
Speaker Change: The first question is a bit of the ambiguous abroad question regarding that Trump tariff and also a forex it's getting in appreciation so the earn out.
Speaker Change: The do you feel any deceleration of the growth right now that's the first question and the second question is yes, you talked about the spin off of the financial services business. So not just let me do that financial services, but let's say the semiconductors and other segments do you plan to kind of a spin off.
Speaker Change: Of the other segments do you have the idea that other segments to be spun off that's a those are the two questions. Thank.
Speaker Change: Thank you very much for the question to the first question regarding the sense of growth or economic situation. Yes, we have been watching how things are evolving, but if we do we have any major change right now.
As far as our business is concerned we are not really seeing a big change.
Speaker Change: Or maybe yes, there is usually a little bit the time lag of when we start to see some deceleration. So that's about we have to be watching for it.
Speaker Change: And maybe the employment is going to be the first indicator, especially in the U S. The employment situation is something which we are watching for it that's the first answer.
Speaker Change: And two U S SEC.
And things about the business portfolio.
Will it be enough.
Speaker Change: <unk> is a is it tending to attract a lot of our attention. But this is just one of them at the dollar trees and what we wanted to do is the most important more important well, yes. The business portfolio is always dynamic another static, but it's always dynamic well you have to think about it.
Entire Sawhney: Ah as entire Sawhney and also eat the business segments.
Speaker Change: Now each segment is able to grow.
Speaker Change: To the maximum level, that's something which we have to think about and our financial services business as a solution, where you decided to spin off spinoff that business. Other business events do we have any plans, we do not have the plans to spin off the other segments, but as a necessary we have to think about the different options or maybe one of them.
Speaker Change: Options on the table, so all of that but I can say about it as of now for the short term are we going to think about any spin off now that that question. Thank you.
Speaker Change: And Tim is limited to the next will be the last question.
Speaker Change: The person in the center.
Speaker Change: Ro.
Speaker Change: And this very significant second from the left my left.
Speaker Change: Toyo Keizai Omega is my name.
Speaker Change: And to your question.
Speaker Change: Thank you Lee maybe to the extent that the anime business.
Speaker Change: And Eplex unquenchable.
They are crossing a way to segment and how much contribution are they making it to your profitability is hard to see as an outsider is spend a lot of time, explaining about this today as well. So what is the size of the profit how much growth you're expecting can you quantify to the best means possible.
Speaker Change: And well it might be that it would be better to make it into one business segment, because there's a person like me is looking in to the proof of business performance, it's easier for me to understand yes.
Speaker Change: Yes. Thank you for your question and comment yes.
Well and Eplex is.
Speaker Change: Dominion Music segment, and Crunchy will is in the film segment, but.
Speaker Change: Well.
Speaker Change: We are not disclosing our the performance of each company I and but the debt to the best means possible in our explanation of the different business segments. We try to convey this to you and he gave it to you once it reaches a certain size.
Speaker Change: But yeah, yes, I took your comment that it might be better to reorganize well, yes that is one way of thinking but.
Not just for the sake of people understanding our business forecasts. There should we do such things is that we have to think about the motivation of the organization and the expertise of the people working there we always have to think about the optimum way and we.
Speaker Change: Well keep in mind such options, but at this point in time.
Speaker Change: We do not have any plans to make any changes to the organization and the second is about I I S. S. Well then profit has increased this year, but have you talked about reviewing investment.
Speaker Change: So are there any thoughts of this plus.
Speaker Change: And also the automobile sensitive at the mid to long term growth I think of that as Ive included there. So what is your outlook of the market growth and the overall outlook.
Speaker Change: Thank you.
Speaker Change: Well about the investment yeah.
Speaker Change: We are always thinking about this but.
Speaker Change: In my speech I did touch on this it's briefly.
Speaker Change: But we have to think of the long run and think about the census at evolution.
Speaker Change: Rob in the long run because we have to invest in manufacturing and this investment how should we implement the investment is that they are of importance to us and are we going to do it 100% alone.
Speaker Change: Are we going to invite a investment partner or.
Speaker Change: They have right.
Speaker Change: Hum light.
Speaker Change: So there are different options so one tabby.
Speaker Change: We execute is something that we are always thinking about.
Speaker Change: We have to think about are the and then say investment and also our capability. So this is also the positioning in the market. So we have to think about the optimal option.
Speaker Change: And about the automobile sensors.
Speaker Change: I don't live in a sense is as the market is growing.
Speaker Change: But yeah, so growth is significant.
Speaker Change: And as you know.
Speaker Change: Chinese OEM.
Speaker Change: Vs.
Speaker Change: Electric vehicles.
Speaker Change: But.
Speaker Change: The Chinese OEM.
Speaker Change: Electric vehicles. This fierce competition and it's only after surviving that competition if they have extra capacity. They go overseas, it's additive or they are very strict about pricing.
Speaker Change: The automobile says the market is growing in size, but.
Speaker Change: We have to keep an eye on these developments.
Speaker Change: Because it's.
Speaker Change: It's not a business unnecessarily, where you could extend a large margin and large profitability.
Speaker Change: Having said so.
Speaker Change: That is a outlook has changed we are updating the market trend.
Speaker Change: And think about our business allies and make adjustments in our strategy that is the way we look at it. Thank you.
Speaker Change: Okay.
Speaker Change: This concludes the questions from the media.
Speaker Change: <unk> from the investors and analysts who will start at 510.
Speaker Change: Of eight excuse me.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Next we'd like to move on to the question and answer session with investors and analysts.
Speaker Change: This is condo from the IR group I'll be the moderator.
Speaker Change: For those of you participating online please click the arrays hand button on your Webex screen, if you have any questions.
Speaker Change: In this room, please raise your hand, and we will bring.
Speaker Change: The phone to questions limited to each person anyone would like to ask a question.
Speaker Change: Yeah.
Speaker Change: Second a role on the right hand side from the and sees our moderators.
Speaker Change: Syed.
Speaker Change: He don't come all from innovation investment first about the games the first question.
Speaker Change: In the strategic a presentation I think you are trying to increase our monthly users and this is increasing quarter by quarter. This a monthly active users why is it increasing and.
Speaker Change: How do you plan to continue increasing that going forward can you. Please elaborate on that point, especially in 2026 and 2027 I think the sales of the consoles are going to go them. Therefore, I want to know about this I mean I answer each one of your questions.
Speaker Change: So on the game and network service I'd like to ask us telephone to respond to that question.
Speaker Change: M a U.
Speaker Change: Yes.
Speaker Change: During the past 14 quarters.
Speaker Change: So always has been positive a year on ear.
Speaker Change: The generation are evolving from peers for two P. S. Five we've seen some changes.
Speaker Change:
Speaker Change: Rather than changing from one generation to the next generation V. S. Four continues to be used.
Actively I think that is one of the most conspicuous or differences so going forward every year.
Speaker Change: P. S. Fives sales are will continue to increase and the transition.
Speaker Change: Transition from P. S Ford to P. S. Five may happen. However, many of their users are new users.
So in the future and a U S b.
Speaker Change: Aleve will continue to increase I have that confidence thank you very much.
Speaker Change: The second question.
Speaker Change: About a console sales.
Speaker Change: In the Q4.
Speaker Change: The our sales were $3 8 million.
Speaker Change: Which was slightly less than Q3, but Q4, if you think about the tariff I think maybe you should've brought it forward.
Speaker Change: This Q4 $2 8 million.
Units.
Speaker Change: When you compare that to your domestic plans and also the 'twenty 'twenty six console sales are what kind of plans do you have for the 2026 cycles office is the Q4 unit sales. It was as expected our Q3 as you know.
Speaker Change: Was the holiday season, so of course, our sales Ah was very high.
Speaker Change: Including promotion.
Speaker Change: We had new titles and it was the most active season of Q4 in terms of the season I think it was more composed.
Speaker Change: So the numbers of units it was as expected.
Speaker Change: Now about this year our sales.
Speaker Change: This is a domestic image.
Speaker Change: Is 15 million unit sales is what we are.
Speaker Change: Anticipating.
Speaker Change: So it's not that we have a very strong.
Speaker Change: Our intention.
Speaker Change: Cause you know there are a lot of.
Speaker Change: Tariffs and uncertain issues around the environment, so rather than looking for the unit sales, we want to look at the entire market.
Speaker Change: And tried to have a flexible approach to the shipment.
Speaker Change: Okay.
Speaker Change: Next question. Please if you have a question please raise your hands.
Speaker Change: No.
Speaker Change: Ah the third row from the front.
Iota: On the right hand side block. Thank you I am Iota from Jpmorgan Securities I have two questions.
Iota: The first question is regarding the impact of the tariff 100 billion yen.
Iota: Yes, our assumption, let's say if the assumption going it continues for the next fiscal year to sell 100 billion yen impact is expected for the next fiscal year.
Iota: So yes, it will be pushing down by 100 billion yen for the next year or by implementing some of the actions you may be able to reduce this impact or maybe a game 18 days I N. S. S. A S M scheurer those other segments, which are in.
Iota: Active by the tariff, but are meeting or thinking about timeline out. The actions are maybe there are some segments, which have more difficulties in taking those meters and are having a less impact would you. Please talk about that okay.
Iota: To that question, let me answer to the question.
Iota: Raw.
Speaker Change: Oh, we do not have a specific stimulation.
Iota: No.
Iota: But.
Iota: The measures, which we are already implementing on top of the measures. We may have to implement other measures. So that we can minimize the impact that could be the reality. So how we are going to take those actions or measures.
Iota: Well, usually we have to reduce the fixed cost and yes.
Iota: Trying to be competitive this is leading to the more competitive less so maybe we have to do it of course, we have to do it and of course, the shipment from where we are going to make the shipment that is also a huge impact factor. So thinking about this flexibility of supply chain, we have to refine and adjust the.
Iota: Supply chain.
Iota: And also a in terms of so many skus for a certain segment. If it's not profitable then maybe we may have to think about discontinuing or terminating the business if its not profitable or maybe we may have to switch to the next different model or maybe we have to pass the additional cost onto.
Iota: The price.
Iota: So yes.
Iota: Some segments are difficult to take imagers, but in terms of taking measures I N S. S.
Iota: Well the price.
Iota: Okay.
Iota: This is not the business model, which we can control the price. So maybe this is a little bit more indirect influence.
Iota: Or in that case the level of the investment has to be reviewed so that could be one option.
Iota: Whoa.
Iota: The assumptions.
Change.
Iota: With a really short time or short term right now and if this is going to continue for the next year I think that we have to think about a lot more measures. Thank you.
Iota: The second question is for junior and N S. The operating income are the assumption for the operating income for this fiscal year. The reason for the increase the first party increase of the profit and also add on contents are not there for us.
Speaker Change: D about third party game contents.
Speaker Change: Well, we got into first party, yes, maybe the major titles are based upon the previous titles and also regarding the third party, including add on.
Speaker Change:
Speaker Change: I think in the past so you don't really have a huge numbers onto the forecast at the beginning of the ear will what's the difference in terms of the expectation to that segment. Thank you.
Speaker Change: Regarding our first party titles for this fiscal year.
Speaker Change: Ghost of Yotzei, It best lending too and marathon. So those have been already announced so we have a major multiple titles in this fiscal year. So in this regard.
Speaker Change: Stranding two angles of Utah.
Speaker Change: We have the cycles so yes.
We can expect up to a certain extent of their phones are going to also enjoyed a new titles regarding the marathon well. This is a new gyro.
Speaker Change: Relatively speaking so maybe we see a little bit of the risk. However, this is a kind of a reasonable are forecast to be incorporated made regarding the third party titles are we also have quite promising lineups of that third party titles.
Speaker Change: <unk>.
Speaker Change: So yes.
Speaker Change: The install base of the coastal and M E U.
Speaker Change: We are expecting the solid numbers in terms of the consumption.
Speaker Change: So.
Speaker Change: We believe this is reasonable.
Speaker Change: And also a G D. A six is not included in our forecast. Thank you.
Speaker Change: Next question please.
Speaker Change: Online.
Speaker Change: Mechanism from Mizuho Securities. Please.
Speaker Change: Can you hear me yes.
Look I never Miss that was a good day. Thank you.
Speaker Change: I have a question did italianism.
Speaker Change: You become CFO and what issues do you have in mind, what do you want to do what is your ambition going forward for example pictures and games, but they choose ROIC is 6%. So is the lowest and gradual I guess, it's quite visible, but the film making TV production.
Speaker Change: I think it's quite tough them in various ways. So.
Speaker Change: Towson.
Speaker Change: How would you like to boost the ROIC what policies are you thinking of how will you address this issue is it first about games.
Speaker Change: Well under the new organization.
Speaker Change: Cash flow has improved significantly but tell us John you were the CFO them and the top line is increasing I do understand that but operation wise, what changes have taken place and regenerating Ed is a profit and cash flow. Please talk about the changes made and yet.
I think well.
Speaker Change: Earlier, you said that your SG&A so to extend so operation wise I think there's room to make it more efficient and so as they improve profitability. So what are the measures you have in mind for that purpose.
Speaker Change: Yes.
Speaker Change: What I want to do.
Speaker Change: Well my.
Speaker Change: <unk> mission is to ensure the healthiness of our financial.
Speaker Change: It's AD work together with visitor lucky to achieve his goals.
Speaker Change: So Sony Pictures about the structure.
Speaker Change: Yes, I do understand that.
Speaker Change: And.
Speaker Change: So we have I'm glad you will which is disturbing anemia, and it's a very important strategic company for us.
Speaker Change: And as to Ducky C O explained.
Speaker Change: S I E and Playstation network Knowhow.
Speaker Change: Will be leveraged.
Speaker Change: And so as to create synergy so I won't disappoint the business in such a way and second about S. I E. What has changed.
Speaker Change: Well.
Speaker Change: I think there are two major changes one.
Speaker Change: So Ed units Oh, what's the focus but now they are focused on N. A U. The management approach has changed so I think there's a major change in policy.
Speaker Change: Yeah.
Speaker Change: So is niche nokia's his strong leadership and I think that.
Speaker Change: And the management is focusing on engagement and M. A U and this is leading to profitability.
Speaker Change: The second change.
Speaker Change: And the first party studio.
Speaker Change: And in the past.
Speaker Change: There is various issues and it did get sand was temporarily the CEO and Carrie I talked about various structural reform.
Speaker Change: And debate if you where's ago years ago financial discipline is his place well, we're still halfway and but there's still upside opportunity here, but I think that mindset has changed significantly that is all thank you.
Okay.
Speaker Change: Thank you.
Speaker Change: So let's move on to the next question.
Speaker Change: Oh, there's a person in the middle of the room are raising his hand.
Speaker Change: Kentucky from Nomura Securities.
Speaker Change: I want to ask about game and I N S. S. Once question each Playstation five.
Speaker Change: The production in the U S. What kind of plans do you have I think the ratio of production in China is higher but if you're trying to diversify our please let us know I think you have some inventory in the U S. So how much have you been able to consolidate.
Speaker Change: Consolidate that and our next one is I N S. S. I think on the manufacturing process needs to change well.
Speaker Change: What will that be is it the mobile a manufacturing or could it be some kind of automotive.
Speaker Change:
Speaker Change: Equipments are I think you have made investments in the past so compared to that past how much investment are you planning.
Speaker Change: When.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: On games I like to answer your question, Playstation and the peripherals.
Speaker Change: Is being produced in four countries.
Speaker Change: In the China has high ratio, yes, that's true but.
But the supply chain has been a diversified and it's not just China, but are there other countries.
Speaker Change: Countries in which it's being are going to be produced manufactured inventory.
Speaker Change: Of course, the details the change from day to day.
Speaker Change: But it's a the inventory for three months of distribution that is of the image.
Speaker Change: I N S F.
Speaker Change: The manufacturing process. The review a new process is going to be introduced.
Speaker Change: The sensor needs to evolve.
Speaker Change: It becomes a much more.
Speaker Change: Yeah.
Speaker Change: Oh.
Speaker Change: We need a much more.
Speaker Change: The mobile type of image sensors, which will need a much more precision higher precision. So it's not in the current MRP, but our next one and the following our mid range plan will incorporate that in 2030, it will gradually start to incorporate.
Speaker Change: These are changes the details, though will be announced a when we update our MRP every three years or so at that time, we can announce or give you the details.
Speaker Change: The investment the size, it's very difficult to compare to the past.
Speaker Change: This firm our P. I think yes, it went down.
Speaker Change: But if you look at the one before this one.
Speaker Change: I think we are probably getting closer to the two.
Speaker Change: Rfps back so the it depends on the fab and that is going to start operation in Kumamoto of course, so we're not going to undo the investment.
Speaker Change: Without any plans it depends on the demand we have to have an optimal type of a gradual investment that will take into account the demand.
Speaker Change: Our time is limited. So next question is going to be the last question.
S M D C Nikko securities catching us I'm. Please.
Speaker Change: Okay.
Speaker Change: Two question. The first is regarding tariff 100 billion yen and one third for each segment and game is all of it is smaller and the semiconductor is a bit higher than what I expected in case of games allocations are changing that's about you explained but I.
Speaker Change: S S I N S S.
Speaker Change: Ah shall we understand this as a indirect impact that's a first question. The next is the operating cash flow. So the additional part will be returned on slide 29, and that was what I heard and yes regarding the strategic investment.
Speaker Change: So yes, those will be on the shareholders' return, but 1.8 trillion, which is the strategic investment so as a first initial ear what would be the level and also the future thinking.
Speaker Change: Thank you.
Speaker Change: Well. Thank you very much to your first question I N S. S Yazoo expected it's.
Speaker Change: Indirectly influenced so the end products demand decrease is reflected onto the simulations.
Speaker Change: And in terms of the capital allocation cause I'm. Please yes, let me answer to the question regarding the capital allocation the strategic investment progress.
Speaker Change: They kept all allocation well that's fiscal year, they execution Cassia out OLED and also made the decisions and that is counted as capital allocation progress from the previous year is about a 500 or maybe upon at 510 billion that's being progressed.
Speaker Change: The accumulative for that three ear as was explained by telephone at one point to eight trillion, which is not changed but the growth investment we always try to see the opportunities for growth investment and that is going to continue and that is what we are going to invest the operating inc. Are in the offering.
Speaker Change: Operating cash flow, yes, we are going to occur.
Speaker Change: Alright that to the shareholder return so we have to have a good balance in terms of the capital allocation. So we are better at a capital allocation. Thank you.
Speaker Change: Okay, so with that we'd like to close this at Sony Group Financial group the corporate.
Speaker Change: Strategy in earnings announcement presentation 2025, once again, thank you very much for your participation.
Speaker Change: So now all the speakers are going to at this stage. Thank you.