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

Sony Group Corporation (NYSE:SONY) Q2 2024 Earnings Call Transcript November 9, 2023

Sony Group Corporation misses on earnings expectations. Reported EPS is $1.12 EPS, expectations were $1.19.

Unidentified Company Representative: The time has come. FY 2023 Q2 financial results announcement for Sony Group Corporation. I am Okada, Corporate Communications. I will be serving as master of ceremonies. Let me introduce the people on the stage. First, Mr. Hiroki Totoki, President, COO and CFO; Naomi Matsuoka, Senior Vice President, Corporate Planning and Control Ned Group DE&I support for Finance, Business and Entertainment Area; Sadahiko Hayakawa, Senior Vice President in charge of Finance and IR. Today, 3 persons will be explaining the consolidated results for the second quarter FY '23 and full year consolidated results forecast, after which we are going to have a Q&A session. We are scheduled to have a total of 70 minutes [Foreign Language]. Today, after Ms. Matsuoka and Mr. Hayakawa explained the content on here, I will summarize the entire earnings briefing. Mr. Hayakawa, please go ahead.

Sadahiko Hayakawa: From here, Ms. Matsuoka, and I will explain. Consolidated sales for the quarter were JPY2,828.6 billion, an increase of 8% compared to the same quarter of the previous fiscal year. Consolidated operating income significantly decreased JPY106.4 billion year-on-year to JPY263.0 billion, mainly due to the JPY64.3 billion decrease in the operating income of the Financial Services segment. I will explain the details in the parts devoted to each business. Adjusted EBITDA decreased JPY60.8 billion year-on-year to JPY426.4 billion. Income before income taxes decreased JPY113.5 billion year-on-year to JPY257.6 billion. Net income attributable to Sony Group Corporation stockholders decreased JPY81.6 billion to JPY200.1 billion.

A team of content creators using the latest devices and software to produce high-quality animation and motion pictures.
A team of content creators using the latest devices and software to produce high-quality animation and motion pictures.

Results by segment for the quarter are shown here. Next, I will explain the full year consolidated results forecast for FY '23. The assumed exchange rate for the second half of the fiscal year have been revised to approximately JPY142 for the U.S. dollar and approximately JPY152 for the euro. The full year forecast is for sales to be JPY12.4 trillion, an increase of JPY200 billion from the previous forecast for operating income to be unchanged at JPY1.170 trillion. And for net income attributed to Sony Corporation's stockholders to be JPY880 billion, an increase of JPY20 billion from the previous forecast. Adjusted EBITDA is expected to be JPY1.785 trillion, an increase of JPY35 billion from the previous forecast. The consolidated operating cash flow forecast, excluding the Financial Services segment is expected to be JPY1,160 billion, a decrease of JPY90 billion, mainly due to the impact of the foreign currency conversion adjustment resulting from the change in the foreign exchange rate assumption and the increase in working capital in the G&NS segment.

The FY '23 results forecast by segment is shown here. Now I will move on to an overview of each business segment. First, the G&NS segment. FY '23, Q2 sales increased a significant 32% year-on-year to JPY954.1 billion mainly due to increased sales of PlayStation 5 hardware and an increase in third-party software sales. Operating income increased JPY6.8 billion year-on-year to JPY48.9 billion, mainly due to the impact of increased sales despite the deterioration in profitability of PS5. Adjusted OIBDA increased JPY18.9 billion year-on-year to JPY83.1 billion. The FY '23 forecast is for sales to be JPY4.36 trillion, an increase of JPY190 billion from the previous forecast. Operating income to be unchanged at JPY270 billion. Adjusted OIBDA to be JPY385 billion, an increase of JPY10 billion.

The overall number of monthly active users for the PlayStation in September was 107 million accounts, an increase of 5 million from the same month last year. And the proportion of PS5 users who have high user engagement increased to a little over 40% of the total. In addition, total gameplay time during the quarter increased 4% year-on-year, a stable level of growth. PS5 hardware unit sales for the quarter were 4.9 million units, basically in line with our expectations and a 25% increase over the number of PS4 units sold in the second quarter FY 2016 when we sold 20 million units for the year. We have kept unchanged our high target of 25 million units for PS5 sales this fiscal year. To achieve this target, we plan to release a new PS5 model that is smaller, lighter and data storage capacity.

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To continue reading the Q&A session, please click here.