Sony Group Corporation (NYSE:SONY) Q1 2023 Earnings Call Transcript

So the content of the software sales, can you explain that? That’s my first question. My second question, I&SS. Full year, downward revision, JPY20 billion. And the breakdown of this downward revision with FX, about JPY50 billion positive, I believe. So negative side, 70 — around JPY70 billion impact is there. On the negative side, the breakdown, the sales forecast is revised downside, and this is about half of the total, about JPY30 billion to JPY40 billion, and then the increase in the expenses of mass production launch, about JPY30 billion to JPY40 billion. So the magnitude of the increase in expenses, can you please elaborate? These are my 2 questions.

Hiroki Totoki: Thank you very much for your questions. Your first question, first quarter profit increased — or decreased and the breakdown for that. Profitability itself basically is not changing so much according to our analysis. First quarter — the factor for the first quarter, first, M&A-related expenses, acquisition-related expense. And then Bungee acquisition, and this is on a full consolidated basis now, so the cost related to full consolidation of Bungee. In the first quarter, the breakdown I have not explained, on a full fiscal year, about JPY68 billion, M&A-related expense and expenses for full consolidation, combined, we are looking at that number for your reference. And then your second question, I&SS. As you pointed out, the impact of the reduced revenue and the expenses related to launch of the mass production of new products, these are negative factors.

And the positive factor is exchange rate, as you pointed out. The breakdown, we are not disclosing the breakdown. So it’s very difficult for me to explain. But I would say, image sensors for mobile decreased in revenue and industrial social infrastructure image sensors decreased in revenue. So not only for the mobile, but sensor — image sensor itself is impacted by reduced revenue. That can be a hint for you to understand.

Unidentified Company Representative: Thank you very much. [Operator Instructions]. From Citigroup, Ezawa-san, please.

Kota Ezawa: I’m Ezawa of Citigroup Securities. I have a question, a semiconductor-related question. The inventory is to be lowered, reduced, and then the production expense, I think related to this production yield, but I think that will be improved. I understand in the future, and demand is likely to go up. There are 3 factors affecting the Q2, and later on, those are the important factors. Then if you separate this Q2 and the second half, I think the semiconductor is likely to improve markedly. But still the figure is still so low, or despite this, maybe the improvement of recovery might be delayed slightly. So during the second half, would that happen markedly? So could you please tell us the factors and background factors for your forecasting analysis?