Sony Group Corporation (NYSE:SONY) Q2 2024 Earnings Call Transcript

Sales, promotion-related costs and logistic-related costs will be reused. We are expecting that there will be a reduction. And this will be a factor for increase in profit. On the other hand, for content, continuing on additional investment will be made. And this will be partially offsetting the increase in profit. That’s my response to the first question. With regards to pictures, news there that the strike has come to a close in the morning of Japan time. So how it is coming to a close, we do not know the specifics yet. But no doubt that it is going to come to an end. So for the fiscal year’s forecast, what we are showing now, we are likely to come very close to that or there may be a bit more upside opportunities, but we have to examine in more detail.

This year, the launch impact and comparing this with FY ’24. And is it possible to see increased revenue and increased profit? It’s not that simple calculation. Strike ends then there will be a resumption of the theatrical release and the windowing in FY ’24, there are more windows, then for that, marketing promotion costs will be incurred to be prepared for that. So we cannot just simply compare fiscal year one — fiscal year to another fiscal year and say whether it’s possible to see increase in both revenue and profit. But the fact that the strike has come to end is indeed a positive factor in the medium to long term, and we’d like to increase the profit accordingly.

Unidentified Company Representative: Thank you. All right. So next question. From Citigroup, Ms. Ezawa, please.

Kota Ezawa: Yes. So my name is Ezawa from Citigroup Securities. Can you hear me?

Unidentified Company Representative: Yes.

Kota Ezawa: And I want to ask one on game and one on semiconductors. But games, this period, PlayStation 5 hardware, so to 25 million units target. So according to what Tecan told us, so 25 million unit would be kept. But the profitability, we should look at the balance with the profitability and this 25 million target. So specifically, how do you see it? How much profitability change would there be? So that 25 million units would not be kept? Or to what extent can we try to aim for 25 million objective. So the selling cost, how much more would there be necessary? So how much profit would you like to see? So can you elaborate on that and tell us how you think about it? And the second question is about semiconductors. So the yield and next term.

So there is going to be fruit. So the new products, and there is going to be having issues of yield, I think. So about the yield, can you elaborate on this so that what’s happening in the yield of semiconductor? So it’s not going quite well. So now in the improvement phase, you say, but the improvement, is it a structural improvement that’s happening or that because you are changing to the different kind of products. So is it some kind of a more over — onetime kind of a treatment? So just by changing the product. So — and another additional question, if I may, about the impact of profit. So if you can review this. So 15% impact on the — for free. So JPY35 billion in numbers, is that right? So can you tell us about it?

Hiroki Totoki: Okay. Thank you for your questions. So first of all, on the game network services, so 25 million units and the balance with the profitability. So well, if I put it successfully as a company, we are having the guidance for this year. So this guidance, the operating profit, we are going to keep this operating profit according to the guidance for this year. And the profitability is not going to be too much of a downside from the current estimated profitability. So we don’t do such a drastic discount sales or the promotion. That’s my answer to the first question. And I&SS about the yield. Well, technical content, it’s really the competitivity — source of competitivity. So it’s going to be a quite a detailed discussion.

So I would like to refrain from going into that detailed discussion at this point. But generally speaking, for the semiconductors, so the new wafer, the new product and then the yield to stabilize, we would require a certain amount of time. So it starts from low yield, and then with the improvement, then the targeted level can be achieved. That’s how the new product of semiconductor would go. So I think it’s taking more time than we first initially thought. So we are challenging new technology here. And it’s not just one new technology, but we have several issues here. So that’s keeping us from advancing. And our semiconductor is with a long touch so the wafer in. So the improvement situation, we cannot see the total picture very easily because that is quite long.