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Sony (SONY)

Participants
Hiroki Totoki Executive Deputy President and Chief Financial Officer
Kimio Maki Senior Executive Vice President Officer of Electronics Products & Solutions Business, Representative Director, President and Chief Executive Officer, Sony Corporation
Yasuo Nakane Mizuho Securities
Ryosuke Katsura SMBC Nikko Securities
Call transcript
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Unidentified Company Representative

We’d now like to begin Sony Group Corporation’s Earnings Announcement. I’ll be serving as the MC. My name is Okada from Corporate Communications.

First, Executive Deputy President and CFO, Mr. Totoki will present the consolidated results for FY 2021 and consolidated results forecast for FY 2022 followed by Q&A.

end XX to scheduled are in minutes. about We Mr. the floor yours. is Totoki,

Hiroki Totoki

deepest about start I in my conflict victims will will as that I as and I the the want to conflict. of by express be first, Today, restored. the At that talking situation peace hope be the Russia. Ukraine to soon resolved sympathies possible and will

FY Ukraine consolidated ended we scale of in our and And XXXX sales March global the the business about on of situation going Russia the regions Our X.X% are these forward. year in fiscal XX, impact impact have XXXX. although was on economy monitoring minimal the performance, financial

FY FY slide. results forecast billion flow metrics on segment profit the Consolidated I to of The results the record cash billion, each the XX the segment ending net exclude allowances by increased before income is ¥XXX.X ¥XXX.X against FY of Now, seats. year and X and Pages decrease shareholders materials results ¥X,XXX.X by cash deferred XXXX. to year This in consolidated Sony XXXX. we’ll increased March to XX, topics, three attributable billion for ¥XXX.X previous income was billion income for operating valuation XXXX. billion will which next to ¥X,XXX.X following fiscal both increased which shows consolidated the the discuss reversals previous the ¥XXX.X of year results Group fiscal excluding for billion. highs. operating to one-time forecast XX% FY’s show slide services recorded financial And billion materials ¥X,XXX.X compared consolidated to in see tax compared assets billion billion, fiscal the consolidated flow the consolidated sales for XXXX taxes was Corporation’s Please segment Income ¥XXX.X to were for adjusted ¥XXX.X are the to shown and actual presentation of items. –

to As sales billion. expected to be ¥XX,XXX expected billion operating be ¥X,XXX income and

shows forecasted the to approximately U.S. this expected ¥X,XXX fiscal actual foreign the leading to services and dollar impact estimated operating factors billion. estimated excluding flow to segment you U.S. compared of to the for operating income previous is depreciate currency is change the income billion to rates positive in an Now to the the cash the ¥X financial slide and an Euros impact year. They ¥X dollar for are approximately have the the exchange assumed the Consolidated operating billion Euro, on operating against against depreciation ¥X ¥XXX year. positive income ¥X year have to is ¥XXX

XXXX. non-first sales rate it’s FY a third increase an on now XXXX sales Operating is in XXXX Operating the Bungie, the billion a in the risks increased XXXX much the review growth forecast Our our billion. major of the such income the in business services sales based first as Ukraine billion, expected each – forecast of of situation and and currently Game the IMF is profitability party increased the as the in by December FY such software. close expected that impact year-on-year relevant segment ¥X.X to slide to segments. a FY of increase to in global acquisition XX% by ¥XX.X year-on-year due incorporates is on This improvements forecast published decrease lower as ¥XXX.X expected recent ¥XXX and economy January of which X based of will that due COVID-XX authority XX, assumptions billion and the direct in impact possible as the projected the the year-on-year of of of explain in Russia to ¥X,XXX.X to all FY to results will shows XXXX. I China. to This billion Inc., situation network X% for categories. despite at under is by income impact PlayStation to billion. significant year-on-year primarily assumption quarter is ¥X,XXX ending hardware sales

Excluding expenses ¥XX essentially operating in estimated year-on-year. billion income flat to including acquisitions associated the is approximately with Bungie be

strengthening impact forecast. ¥XX development plan expenses addition, to billion by have existing approximately year-on-year In party that software we and increase first studios into software this aimed our at we at incorporated

and new we studio order a creators of this sales content is game as a Haven many Bungie. for based developing a of Creed the addition much by unit studio founded is hardware a a one current currently a in acquire PSX has Entertainment in Jade The parts Assassin’s to capabilities strengthen of for and on forecast it number to In gathered developers into franchise. Haven XX further, Raymond, to the entered is development acquisition units, Our million into procurement. title. agreement development Haven our our blockbuster visibility Montreal, Studios known excellent Canada game primary definitive

and in our acquiring recent studios. existing have development as significantly years content we Haven In increased in Bungie to such addition studios in our investment

result, first a our grown revenue a rate. party As at software high has

party platforms. and on Going software forward strengthening to game grow multiple business first deploying we aim the by software our that

segment. music the is Next

Fiscal billion in media are fiscal to ¥XX.X XX% revenue sales. ended due in operating income accounted billion ¥XX.X new the XXXX such recorded visual is increase billion, our to XXXX The music for visual and XX% Alamo an of of artists increased mainly due to growth Records. roaster to year-on-year acquiring In the sales ¥XXX to strengthening streaming XX% the the approximately to platform year-on-year from continuing of contribution expanding for ¥X,XXX impact in publishing, to year-on-year nurture increase operating we income in ability of increased expected to music and billion, discover significantly sales to the music, as recorded billion. income year-on-year increase Operating year-on-year sales segment XX% labels, revenue. a March mainly and Although operating In and to expected billion ¥X,XXX.X year. the XX% fiscal the media a income ¥XXX.X platform are XXXX, of contribute streaming year-on-year the increase to decreased, significant segment. quarter and XX, fourth increased

our XXXX. Roblox such of steadily steadily partners, a continuously with As our having top these load create XX TikTok, to XXX hits, and expanding are profitability. increasing result an has ability efforts, base with Spotify’s Meta fiscal of opportunities increased, global weekly in business songs and songs are in digital Moreover, as new average of

for starting normal to the box U.S. chiefly Motion the office Pictures. Next return segment in is to of operating approximately this in with is to environment Pictures recovering XX% revenue the pre-COVID-XX segment levels,

of popular historic and television addition, due Operating ¥XXX.X the hit, increased in Way In income ¥XX Seinfeld, games. mainly increased significant from impact of Home, year-on-year the XX% a No and due blockbuster increase significant the to sales a year-on-year revenue sales billion to ¥X,XXX.X billion GS FY’XX licensing to series, a gain from Spider-Man: trillion. to recording significant the ¥XXX.X transfer and the of

a expected resulting digital media to the expected Although fiscal year, in expenses motion the to the operating not years, pictures our is The previous due ¥X.XXX releases, fiscal licensing and for trillion mainly margin revenue. exchange due revenue Operating a billion, benefitted par expected due ¥XXX sales from forecasting is from previous year-on-year, ¥XXX.X significant XXXX to major networks to decrease releases expected to fiscal and as mainly segment items income in increase increase distribution which one-time to billion of impact year. such to lower X% for last rates focus to is are income compared fiscal films of to year-on-year, to the then the the X.X%, in fiscal decrease XXXX decrease two services. with of lack fewer

COVID-XX Universe for when profitability the has the compared are the are result. steadily another segment production as increase the improved. spin-off Sony is Venom and chiefly the an content and IP Marvel Kraven distribution in video services of see character IP of pandemic, on this However, and up strategy more from segment Spider-Man Characters to leveraging a as of opportunity demand strengthening pillar our before of with views we Hunter. A Pictures our we the content following In called we the

documentary we are strategic producing of first In the in of adaptation television game title which the Us, production the of of Ghost in the are Bad of UK. pursuing and popular the as leveraging studio Motion of the In production into drama with Industrial Idol a movie as such addition, Uncharted Pictures, our popular adaptation Tsushima PlayStation has acquisition Last content reputation and the game we Media, success TV the IP the following leading by American a and content. show, variety acquisition video Wolf, investments for proceeding such

to Solutions ¥XXX.X trillion, billion. Electronics from sales due mix. the the to in Fiscal sales, to the XX% an year-on-year is Mainly resulting Next product Products sales cameras an increase billion year-on-year and XXXX of increased TVs to in operating income due of segment. ¥X,XXX.X improvement in ¥XX.X increased increase impact and digital mainly

semiconductors. we disruption components, from a of logistics of During the continued supply resulting manufacturing many shortage year, fiscal as and constraints, previous faced various and the such pandemic COVID-XX

exchange chain due were impact Fiscal close are income operating issues of a to to rates, mainly increase management expected mainly is X% decrease a margin income these decrease expected impact in billion forecast supply able trillion, through billion year-on-year X%. billion. overcome we an in incorporates China. achieved to chain impact sales to despite of and additional approximately of the However, estimated to XXXX Operating over of of This our of and ¥XX ¥X,XXXX to supply an TVs. ¥XX.X of the sales forward COVID-XX observable the already spread unit ¥XXX total on to due going

Going at expected as possibility continuous This the months we take infection, will to three from normalize. as surrounding to region, of for procurement well be the that of operation there Shanghai constrained. forward, currently in is parts the a spread situation factories the and the approximately region will due

the the the changes to improve year than in be from and the this in severe resilience operation, profitability. of environment streamlining our expect our responding With aim and By slowdown the maintain and to rapid the to resulting going situation of forward market, and global inflation, further even we fiscal our Russia environment we quickly years. the through enhancing more Ukraine to and recent in digitization demand changes economy will

of name the I’d this the in segment. like change explain to Now

other form quite this We and for have audio, the some communication customers our been of visual, technologies condo time. to to entertainment deliver experiences using segment in in

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Kimio Maki

Imaging year-on-year Sensing to Operating equipment. sensors income rates the to increase ¥XXX year-on-year is ¥XX.X sales and billion trillion, trillion impact ¥X.X ¥X.XXX increased FYXXXX the X% exchange sales and for digital primarily increase Solutions primarily impact to increase. income segment. ¥XXX.X FY’XX expected cameras of and Next billion due due industrial year-on-year to sales & increase the expected of of billion, increased operating to sales billion. XX% to ¥X,XXX.X to is

market to to to we demand midrange ensure to that this increase capture industrial applications our severe environment for achieved sensor can to increase in for segmentation stable the year-on-year the one-time the a market unit growth continue certain increase in smartphone our of growth this year is maintain, the billion, in previous quite is market believe sensors slightly expanding billion the we our the used – success digital impact capital profit do image revenue premium further room R&D the phones. loss plan Services China. base business mid-range our in Financial due FYXXXX ¥X.X delayed our an share we on a been in increase operating the approximately sensors accelerate level that decreased Last respond pursue Thus, significant cameras funds. primarily is the increasing size, expect better smartphone and this over a the their of segment, During in primarily capital decreased to and revenue to technological insurance even we throughout to the there The unauthorized medium the X% grow expansion have in investments per profitability quality, from the was But of for to Financial ¥XXX.X manufacturers primarily upwardly recovering diversifying current market we due from and at increase plan, term. ¥X,XXX.X movement growth And updwarded devices, year. segment beyond. value ¥XXX image at the year, at Sony subsidiary due image forward. share. opportunities, to of for despite due Life, scheduled from to and related expenditure increase income the the approximately expenditures we in There to of the image market with Sony They and revenue net and to but refocusing fiscal have XX% their the billion the again, to an course in quality decrease the expenditure automotive the mobile timeline for sensors, and in thus, of we due Insurance, however, gains To – plan over FYXXXX Life plan sales are expand for our high-end added ¥XXX Sony more purchasing we to expect release the growth and forecast separate improving accounts year-on-year in to the are Recently, on withdrawal for the revised for seeing robust sensors. a market Services the a midrange going to competitiveness. billion approximately also Life mobile during us of initial to billion, CAGR will along customer

Sony insurance income to New that selling ¥XX.X operating the to increase policy revenue The Life Services increase to to force our FYXXXX billion ¥X,XXX is is year-on-year, by success to driven corporations. during grew FYXXXX operating in the again income withdrawal about of completed includes Financial on recovery sales billion impact expected ¥XXX X% X% which the last and of in billion. we impact the a unauthorized recorded a with real estate billion year in the and Life. funds ¥XX associated Sony from of combined the fiscal previous forecast approximately loss the month the both expected

Now I’d Sony’s theme of plan our of like under to explain progress evolution. mid-range fourth the the

high ¥X expansions plan, and businesses. G&SS expected areas, Sony mid-range curve growth markets that a achieves by we a than to we music, fast Operating ¥X.X has to ¥X.X trillion. increased aim growth this company business segments. our to on compared per higher plan. also four now XX% KPI group further investment income across growth trillion the compared total year. our of expect the Sales into During evolve originally this, growth EBITDA, driven and previous is increase in I&SS the consolidated through the on collaboration pictures to we investment and significantly three-year through And it trillion and are expect in our adjusted cumulative to priority Based up to exceed which target

three the on update during allocation, cash the plan. Now of operating years progress capital consolidated to generated of of flow I’d mid-range amount the you like our this

mid-range in the to and or the original from carryover to sales Excluding a ¥X allocated. I to segment made ¥X.X decided have of asset including expected growth Sony for our plan will improvement. due to allocated, we income been the and ¥XXX believe by trillion the ¥XX.X Also is of strategic more repurchase borrowing plan leaving how no more, progressing long-term available expenditures ¥XXX mainly previous more, strategic total by executed capital in investment approximately increase will compared earlier make ¥X investment we our rapidly. billion this explained of thus, investment a to than we billion trillion to to have be amount approximately ¥X,XXX are Added be be trillion that of plan, billion total or to the Services I&SS to stock the or amount this increase segment change will Financial operating billion

address. of with to environment and obtained billion in have that the investments external be authorization quite We Sony a implemented repurchases maximum be ¥XXX year, in the we of FYXXXX strategic continue that my flexible this manner. steps be time, remarks. This in and to sense over responding harsh changes Lastly, growth achieve to long-term continue concludes we many Sony repurchase have another will caution. part with to will highest as believe the swiftly issues while the the take At of these over stock I’m CFO, risks next of same the to will will And managing to environment. we a

Unidentified Company Representative

X:XX you [Operator media. PM, That be to and last Q&A, Mr. Finance questions the Senior will now and Naomi we of session and begin. Corporate media President, the Thank President was will Finance for Hiroki the Sadahiko start Instructions] is Support Totoki, and explanation Control, Totoki. and and Area, will Those minutes. and We Business we take Entertainment the investors We Each who’ll Hayakawa, for like to From analysts be from for X:XX about in and to and now scheduled for CFO like XX by Q&A. PM, Q&A Deputy waiting. responding Planning Executive Matsuoka, Vice IR. start charge

Now, questions. of question [indiscernible] please. first two please to [Operator limit The Instructions] yourself NHK

Unidentified Analyst

from NHK. hear you Can [Indiscernible] me?

Hiroki Totoki

Yes.

Unidentified Analyst

first has earlier about. the the the raw My being seems yen the question material you. weak that about yen talked of FYXXXX the price it negative is depreciation impact the Meanwhile, results, and increasing is yen benefited and depreciation

about that, the shortage and about semiconductors, you a three other well and second the you cope have For depreciation your measures of question, the this company, what of as months what than are COVID-XX the the depreciation are normalize. the as My And to shortages. the of taking for earlier, China year also there with recovery of talked negatives in yen? do Rather yen?

year, think are the biggest contemplating? looking the what at you do exist? challenges And this measures you business for So going fiscal where forward

Hiroki Totoki

and will explanation. the Hayakawa talk after me And Thank some you rate for question. add exchange your then about first let more

First and Well, a our exchange for segments, we operating about income. of about talk if and games estimate of be the billion and EP&S for I&SS segments network about positive service each €X billion I these ¥X rate. would the and depreciation the ¥X positive

and Now different characteristics for segments. Hayakawa there to segmented, explanation. are add about more business explain therefore each business like different will I’d some

that purchasing music undermined our the in a and about the the denominated And and Japanese for have the think the – prices So – sales U.S. yen our U.S. Meanwhile, I&SS, do income. material on the for positive in consolidated is yen will for which that the the U.S. raw and be also rise, dollar. be prices, ET&S, in are we us this basically, adjustments operating adding materials this to is raw are, well, structure. positive those are business will – And therefore dollars yen. pictures. and and we Well, about converted and to dollar the and G&NS in our and we depreciation profit of about being next And this for will to Europe. mostly

that business yen. Thank all. For profit. therefore Euro depreciation we generated That a and in is Europe and – is our The for you. Euro is our the cost in positive is yen limited

Unidentified Analyst

the increased you rate and Thank we we with of these of fluctuations operation we’re efficiency very to these going DX much. cope and Basically with tolerance margin the cope continue fluctuations businesses and the are exchange improved we so forward. will being to to have do fluctuation, have and

Hiroki Totoki

changed compared we changed amongst source procurement, extent, procurement About areas, our this the parts that second COVID-XX, fiscal also and in think China second as of our a I fiscal to think quite are you and impact last the the – of variety half, we know. different have in for for of well, others. there question example, design second your about And an year, year, the risks to

coping. capable been So have of we

be to the of So a something in we China, point Meanwhile, is the long for procurement, what spread extent, the this it continue spread. and think that time, I thinking good have virus predict. the in early and we think At will is to continue This especially for about well, and will is procurement very how take parts difficult to outlook. this we logistics complacent take lockdown. but right we’re should not now, three to Shanghai that and It look months try it what about and normalize. three months, detect at will That risks those will on.

these to So as able you. be want in risks. Thank active be to them, coping with cope to with we

Unidentified Company Representative

We’ll Newspaper take Nikkei please. question from the [indiscernible] next

Unidentified Analyst

hear My name Nikkei is you me? [indiscernible] Newspaper. Can

Hiroki Totoki

can Yes, you. clearly we hear

Unidentified Analyst

Two you. Thank questions.

risks, your in fiscal may so this you about outlook downside and the year also game same the business the for or have at downside and against assumptions, the First, both. upsides upside time,

could it. mention would sides, if appreciate both So you on I

Hiroki Totoki

Well, proceed you have question. one to Please second the question. only

Unidentified Analyst

question was I the there you amendment EBITDA, revision. you cumulative so. about would in the could if EBITDA, investment, if strategic number second I your My philosophy strategic to investment, I appreciate could this appreciate me of it. increase, MRPs give the XX% and breakdown or give it. think us Well, the And your would

Hiroki Totoki

let to you. expect me estimation. G&NS about Thank the About sales can of in variables, are best with we the that. About how start upsides If highly outlook much these two. titles moment, and the both software, forecast, factored on or this the at and come we These number risks up and our there’s assumptions are expect hits one our hits. upside, with

be only be to higher gradual stage. already to upside. and There want we is game for restricted services users the should our after use PS moment, year. about quality this that play stage to announced or XX easier this, And find network downside, to will are million by the the And included, not releases As enjoy renewed for and be to this and and units June. Plus this business, say, fiscal them we risks it’s needless at or focus

possibility if can and that expand the going forward of it have for the that downside and if in then China, further, procure risk. lockdowns For components parts, pandemic a forward, going have a and good about the the will protection be how situation example, feel components, do but we will to affecting a of worsens the

overnight. happen However, this not will

a focus and be measures. take proactive, have So for need us, we to appropriate

your about MRP. second Now question, about

supplementary or available load of and EBITDA Now has datas forecast. you including for About revision documents base the the profitability and results of others, change the there’s forecast, are Basically, financial see. concerning of been this all the enhanced. the EBITDA to

Now the we moment, to good are the ¥X strategic for – allocated now, we trillion expecting But XX% and opportunities. look this, can investment, this we at be the there at make market growth are using this to if environment.

this at then is necessary, can as we announcement and Now moment, if will you. we fund the make and leave this accordingly. review situation Thank we’ll it an

Unidentified Company Representative

on move Nishida-san, to let’s please. – next freelancer, the questions. Next

Unidentified Analyst

This is Nishida-san speaking. Can you hear me?

Hiroki Totoki

Yes, we can, please.

Unidentified Analyst

I also have two questions.

the is The resolved XX X’s the the business game expected demand. sensors in the in you’re and to leading enough to place semiconductors sensors, end components first high will about are sell that PlayStation of million sales. And is to procurement shortage billion pretty XX demand and the and increase compared – much with the expecting units be that units

if Now, improvement, this the market are market us. improvement, largely for mix educate product overall without depending could on on Chinese Chinese the or is you relying improved that’s you

Hiroki Totoki

question that for To there what related we regarding we demand and a first we is you questions. a parts can side question. PSX million get XX feel demand higher is very your the the Thank procurement. of and components, was feel that. your bit asked little units you questions than us more that comfortable it’s Maybe

demand, the regarding stock whether our still we somewhat. short the think And And still question can low. remain is if was so or very meet whether, I inventory,

becoming we discussion market. trend. INSS, the and our size units set the do sure my trend year with regarding smoothly and inventory manufacturers basis, in of sensors, we also increase or there customers is timely in to That’s And about that’s the that of we memorize. the it still an our can higher PlayStation that we are that is also added stage through large cautious to if earlier as low value we end have market, And talk to smartphone are increase a customers. behind are I provide we make to short. in regions on way sales. the So feel going movement that mentioned And regardless stock sense what and Chinese customers and in in order on respond visible and that the it very – will the slow hope want still to level we by China. communicating the And the this we through with demand level And in

Unidentified Company Representative

please. question, Next

ask the Shimbun, question Asahi please.

Unidentified Analyst

you hear Can me?

Hiroki Totoki

please. Yes,

Unidentified Analyst

In the I XXXX for that But said you about say million, million. was sales target, unit said you this fiscal think year, two have XX I questions XX.X to it both you PSX. PSX. exceed

So reduce why to result have PSX in FYXXXX, you for the second about earlier did you explain PSX you result. said number? And the Can the FYXXXX?

Hiroki Totoki

we fact of And the originally because that that on necessary units. million XX about have reduced question we PSX, achieve was this first about So of procurement point that components at to talking this, this comes for were when not of is safely in we and the given this. components work what constraint more and to say XX.X continue than time, million can was it the up on components. we would like But to can we

you reason actual say? the the FYXXXX, number. did And so change is for that And result the also about in this

Unidentified Analyst

unit actual unit The sales number? – FYXXXX sales

Hiroki Totoki

presented you. unit Yes, actual I sales units. that FYXXXX. PSX, we for Have your answered XX.X that have is million question? the Yes. So Thank

Unidentified Company Representative

Now is time out running on us.

So to please. Kasei, the person next one be will Toyo from ask questions last the Sasaki-san

Unidentified Analyst

hear me? you Do

Hiroki Totoki

Yes. Yes.

Unidentified Analyst

for name this from Kasei. Two My Toyo questions. giving you opportunity. Thank Sasaki is

would you You it. stopped the profitability I if smartphones what that? disclose the increasing, appreciate compared the sales is to year individual the disclosure previous about of the but could disclosure –

each be plan higher percentage what profit the and the where would the added-value, of the both semiconductors, – increase are sales but for the you to earnings talking size and Second, of contribution from each? to about larger the

Hiroki Totoki

Could couldn’t repeat again? I I’m hear, sorry, second you question. Well, your

Unidentified Analyst

Can me? you hear

Hiroki Totoki

please Yes, go ahead.

Unidentified Analyst

explain I revenue sensor, price. the of earnings to you image increase like terms plan volume the sales the contribution the and to in and would About and of each. both to

Hiroki Totoki

I the cost in don’t level appeal margin has fixed say well, smartphones, by can the profitability we see, improved. declined but I the large the about that and disclose improvement, of way, individually, a qualitative merchandise

sales contribute the both – and terms the can to to the this earnings That’s already the market both share. the in share the image of in will the it then so year, improved, profitability seems we there fiscal terms be compared sales to the market of established. sensor, of image slight sensors a And decrease in structure have increase be So increase. stable

the added be will Now, and the value direction. size larger higher

that the price sales. the will up So and unit you. increase Thank or drive drastically push can

Unidentified Analyst

you. Thank

Unidentified Company Representative

XX:XX. It Session] Q&A Okay. session we to the And conclude and session time like people. media is the start Q&A will [Breakout X:XX for at or we’d for investors

Unidentified Company Representative

is proceed and Matsuoka; and charge CFO, of a those Business, English to questions like the beginning, have charge Sosei And Vice the Japanese Executive Hiroki and ask in analyst a we moment. we’d Sadahiko on. have ask to the starting investor, Hayakawa. analyst the Corporation. like the are in to At there Senior refer yourself And in was responding who My version start correcting be moderator Senior shortly. We the Entertainment in Control, take like indulgence. Totoki; Naomi provided to [ph] points Corporate of be questions. Please note Finance name to Instructions] script. now and to and two a Deputy are President questions, limit MSC, will noted. Vice Planning I’m Please I Shinichi, information that the Thank the investor IR early Please and is as serving waiting CFO would mistake how Q&A from the Area, to session. please is Group President now Support, Group. we’d off and questions the will Finance be President you Group, Finance Q&A Q&A. [Operator the we And no for you Those we mistake now speech. and and to for We ask wait to IR, now the

Unidentified Company Representative

first Stanley Now Securities, Ono MUFG the Morgan [ph]. have is speaking Stanley. of This Morgan Masahiro Ono we

Unidentified Analyst

hear can you And me?

Hiroki Totoki

Yes, ahead. we go can, please

Unidentified Analyst

sensing for Bungie be question And forecast or I this the year. next you more of year in year. smartphone billion on comparison level continuing Second effect sales is quite expected And for And invest ¥XX the in about development first with amount further about year you’ll and end regarding Bungie large have development to year. make do of another how high ¥XX from the Those more investment? image and expenditure. R&D billion. software the plan on be and do the first expectation. cost investment segment, and sensors. that’s question much are the game imaging compared cells software plan point ¥XX next you It to similar been expenditure expenditures a will cost down the spending games Bungie stagnating, the in and The have also will a this especially to of this also Chinese billion be

first Now forecast? the will an up inventory my be That lead have five into could your it same have revenue. sensors and built on will should incorporate on months time, hunch, you you usually you if so how have impact these your expand factors

Hiroki Totoki

Okay.

in this this will portions for of forecast, posted And First for and first, the network third acquisition. acquisitions we and but whole and expenditure we year large ¥XX year. we year, Bungie quarter the In this have – for not – have have complete services this year. for for game billion have that expenses fiscal Bungie be this is XXXX, the acquisition in used a itself just the will forecast we assuming fiscal to but

there will slow general conditions. And strategic year FY create And and R&D sales. products we in the will XXXX, is the use the want will least Chinese return future. the looking we in our we reduce the is of increase growth And them. the cost operating At can so so current into we in more market that’s year the expenses I&SS, cost It healthy next will investing purpose for upside Bungie. and which – of game there the – think feel and the And that expect the together and execute. we of in demand hope, Chinese we customers not titles but capabilities, now, this investment, market a but normal slightly market, Chinese we trend the the added we so said, And software titles, number us, the but our for I at income to R&D for directly. XX% right smartphone for next expect XXXX with can chain second inventory and investment supply to half about that, next would forecast the by investment, market that’s hope factors the

acceptable the little you. in have our and respond a cope demand and timing thought. So to higher want to time, to capital consider healthy bit the demand. the is for And us that’s and inventory changes in good to higher We stock with the the same at that’s expenditures also market. Thank the

Unidentified Company Representative

Nakana you. Thank next please. question, Securities. me? hear you Nakane, Mizuho And can Mizuho, Mr.

Yasuo Nakane

two questions. Again you. Thank

be sales, I&SS Totoki-san First, the price volume increase unit said will more significantly. and will increase the earlier slight

will logic increase price added, higher and the value it for cost will As increase. the procurement be also

there factors. pieces, are two think I two

give of going the two? this price. are cost to And can you add much onto the So you sales second, the me of breakdown how increase

– I&SS of in able the Page margin COVID-XX And about G&NS also the are and inventory can handout in the question? logistics For a the that’s the – there’s first of to high think cost question semiconductor. strategy. two think, maintain I and about example, and be the you here you and from gross X second the included and aside inventory. that I will margin see I&SS factors – addition increases the also to There is number I the

in want the this this you’re but price? logic, that larger and added the me higher and the breakdown? the think. and logic bigger at the or the is guess increase And This Well basically because increase either I product I&SS. value regards added budget? larger much price? can impact, in – this well towards Well, it level in size point what your value or about are in then is So assuming about another or talk unit you price, this So, The you the the September of first higher inventory time added. how has how and increase the about size to to be can of we a asking cost, device procurement

Hiroki Totoki

on the this our we details securing the for we give But transaction, the it will to afraid. to add-on proper we Well, basically you therefore I have be deal, that margin. And and a the think we cannot listen. that depends think the devices, look and at have case of will situation, that and sales both the understand not to price. But I not market customers and the shortage and it’s they customer, the I’m

did about of have the capital taken about is the current And therefore of long, demand right equipment. why it’s inventory, now. the that and year fiscal that level. the the inventory meet impact want lead FY this think I And the Yes, it to major fiscal well for level that’s we the and reason measures. in September year the so already inventory for have and to think to we will inventory ET&S I end high, I&SS therefore and capacity, was and but have as be there that appropriate Well any that satisfy also XXXX we year This level. year. the to that that. increase – end the time. the not the starting this any in and level we this into with efficiently the this at fiscal be that about will the don’t much, fiscal materials. and of also also of describes change the intended if being we We inventory and is and doing inventory consideration, this we discussing the our mind investment, change the significant might to intentionally ET&S, necessary towards we put is the – not And on we’re in point time concern needs status. capacity at the in have was an effectively ended, will logistics have at intentional place what for naturally the full run about shortage used, think that’s And demand

want mind. we So And you these with properly all Can inventory control I me? I is alright? to I hear it hear hope think I’ve the Is in the you. cannot answered questions. right. things all

Unidentified Company Representative

from to please. Katsura-san, We’ll Securities, next question proceed the SMBC Nikko

Hiroki Totoki

much, me? very you Katsura. Thank you Can hear

Ryosuke Katsura

this me appreciate If did and documents, Yes. wafers take for you renewal the on and how the what this past the it? idea? I’ve talked into your capacity full June. G&NS could some about shown G&NS. you some On capacity usual, an me it idea, Page basically about in I&SS, be X of you the subscribers; these PS+ your number questions I&SS going There On you and trend? plan? PS+ I renewal as give consideration well give two supplementary a take if Second, of decline will is what’s could would utilization, of forward has

Hiroki Totoki

and I view, before Services excluding mean, numbers. And and discussion deal for decline I of the the The to the year going guess ¥XXX important. joint there’s is Plus to in so Earlier me venture fiscal TSMC, Game is year? demand XX was strong home in billion this compared Well, and that, there million. Page the X% ¥X.X recently, January next billion, peak February to that, you On the And let venture game XXXX, overall an to compared subscribers, an CapEx by so fiscal of compared stay PS for end of number be ¥XXX us. my from play joint decline, there’s CapEx XXXX, from first, will this time give the going not there’s in Oh, this year, now to Network total by has in into quite The the trend an to January been increase March increase XXXX. February but a

So factor, it subsided, high of me the has a level that stay-at-home temporary maintained. engagement it but seems is demand to was the after

So concern PS on Plus. see much on a midterm don’t basis; I

from continue. renewal, level start supported by stage about that and engagement users. the sure would I like and be we be will it onward June take, will a grow positive have the we That’s the So renewal of a manner am stably in that I high to

together on this would like with I a expectations have me. So great you to

in change capacity the and XXXX of end input XXXK three in of the of excluding estimate. wafers March There fourth capacity that’s at model this flood. That’s assumptions. scheduled. XXXX, XXXX? interruptions fiscal a is earthquake be still; the in with end is a And in this investment FY separate is average Well, earthquake the fiscal joint XXXX, wafers the average, of venture these average, facility first and TSMC. slight investment it there great be for was maintenance will but product mix months achieved high the XXXK the The I&SS and level on the average Now, decrease, will quarter, that number three the but maintained, will in about be of the simple XXXK actual and FY year as you. with simple causes January, months with of the with some number there’s of What fourth of – quarter there Miyagi and TSMC. as be from the to XXXK wafers, then a the rough the originally number this quarter Thank

Unidentified Company Representative

We are time. of running short

So We the to asking questions. Securities. Okazaki next Nomura like last person [ph] be of person the have will

Unidentified Analyst

and Thank have semiconductor. you. This question, of at Securities. I is also Okazaki speaking Nomura games each the one

future, content sales the grow that expected for the in substantially, grow how are for that’s, option in you the imaging all will imaging, the the other as segments and of is content, would an incorporated the into that will be sensor a about games but First to what of fleet your PlayStation, renewal And within strengthening be doing. the competitors that?

Hiroki Totoki

on the deteriorate and to what competitor’s the have I services And us, they’re that, and will first for a need improve and platform titles subscription with are we element? the other that shrink X. service, first I comments and current the distribute business do, development quality also concern. to & for R&D games the, improve share the we needed run. expected to Network I that AAA our may making If type see the and title And is for that’s quality refrain the investment from regarding on in our the grow will strategy a investment Game you that cost, will could long products, if the party growth some – and thinking PlayStation proper

of a Eternal So that right titles for be cost to in a in terms spend be development renewal to the profit titles, the manner. titles will those solid we new first we products the popular solid and and sure providing have want And party the, we introduced to platform. with make Spider-Man,

sensor have to growth, mobile growth that balance experiencing all. want And overall and the factor the magnitude sales I&SS, comes for largely and and sales sales are terms laser as we so our driving FY XXXX good are of is for business and growing That’s factors in other in further. driving products mobile but the And what of from sensors.

Unidentified Company Representative

Corporation. Group time Okay, our Sony today’s earnings thank you. allocated We the for announcement this that finishes you your session. of for attending Thank