Consolidated Results for the Fiscal Year Ended March 31, 2023
|
|
(Billions of yen, except per share amounts)
Fiscal Year ended March 31
|
|
|
|
2022
|
|
|
2023
|
|
|
Change
|
|
Sales *1
|
|
¥
|
9,921.5
|
|
|
¥
|
11,539.8
|
|
|
¥
|
+1,618.3
|
|
Operating income
|
|
|
1,202.3
|
|
|
|
1,208.2
|
|
|
|
+5.9
|
|
Income before income taxes
|
|
|
1,117.5
|
|
|
|
1,180.3
|
|
|
|
+62.8
|
|
Net income attributable to Sony Group Corporation’s stockholders
|
|
|
882.2
|
|
|
|
937.1
|
|
|
|
+54.9
|
|
Net income attributable to Sony Group Corporation’s
stockholders per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic
|
|
¥
|
711.84
|
|
|
¥
|
758.38
|
|
|
¥
|
46.54
|
|
- Diluted
|
|
|
705.16
|
|
|
|
754.95
|
|
|
|
49.79
|
|
|
|
(Billions of yen, except per share amounts)
Fiscal Year ended March 31
|
|
For all segments excluding the Financial Services segment *2
|
|
2022
|
|
|
2023
|
|
|
Change
|
|
Net cash provided by operating activities
|
|
¥
|
813.3
|
|
|
¥
|
415.5
|
|
|
|
-397.8
|
|
Net cash used in investing activities
|
|
|
(711.1
|
)
|
|
|
(1,032.0
|
)
|
|
|
-320.9
|
|
Total
|
|
|
102.1
|
|
|
|
(616.6
|
)
|
|
|
-718.7
|
|
*1 “Sales and Financial Services revenue” are shown as “Sales” (the same applies below).
*2 Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with IFRS.
However, Sony believes that this disclosure may be useful information to investors. Please refer to page F-16 for details about the preparation of the Condensed Statements of Cash Flows.
The average foreign exchange rates during the fiscal years ended March 31, 2022 and 2023 are presented below.
|
|
Fiscal Year ended March 31
|
|
|
2022
|
|
|
2023
|
|
Change
|
1 U.S. dollar
|
|
¥
|
112.3
|
|
|
¥
|
135.4
|
|
23.1 yen depreciation
|
1 Euro
|
|
|
130.5
|
|
|
|
140.9
|
|
10.4 yen depreciation
|
Sales increased 1 trillion 618.3 billion yen (16%) compared to the previous fiscal year (“year-on-year”) to 11 trillion 539.8 billion yen. This significant increase was mainly due to significant
increases in sales in the Game & Network Services (“G&NS”), Imaging & Sensing Solutions (“I&SS”), Music and Pictures segments as well as an increase in sales in the Entertainment, Technology & Services (“ET&S”)
segment*. On a constant currency basis, sales increased approximately 4% year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 10.
Operating income was 1 trillion 208.2 billion yen, essentially flat year-on-year. This result was due to significant increases in operating income in the Financial Services, I&SS and Music
segments as well as a significant decrease in the operating loss in Corporate and elimination, substantially offset by significant decreases in operating income in the Pictures and G&NS segments and a decrease in operating income in the
ET&S segment.
Operating income for the current fiscal year included the following:
・Impact of litigation settlements, net of expenses, received in relation to lawsuits for Recorded Music and Music Publishing: 5.7 billion yen (Music segment)
・Recovery of an unauthorized withdrawal of funds at a subsidiary of Sony Life Insurance Co., Ltd. (“Sony Life”) which occurred in the previous fiscal year: 22.1 billion yen (Financial Services segment)
Operating income for the previous fiscal year included the following:
・Gain from the transfer of certain operations of Game Show Network, LLC: 70.0 billion yen (Pictures segment)
・Loss recorded due to an unauthorized withdrawal of funds at a subsidiary of Sony Life: 16.8 billion yen (Financial Services segment)
・The share of profit of the investment in M3, Inc. (“M3”) related to a gain on a change in M3’s equity interest in an affiliated company, resulting from the issuance of new shares in connection with the affiliated company’s public listing:
5.1 billion yen (All Other)
・Settlement gain in connection with the termination of the defined benefit pension plan at certain U.S. subsidiaries: 5.5 billion yen (mainly in Corporate and elimination)
The share of profit (loss) of investments accounted for using the equity method, recorded within operating income, was income of 24.4 billion yen, essentially flat year-on-year. This result was mainly
due to increases in the share of profit of investments in the Music and Pictures segments, substantially offset by a decrease in the share of profit of the investment in M3.
The net effect of financial income and expenses was an expense of 27.9 billion yen, an improvement of 56.9 billion yen year-on-year. This significant
improvement was primarily due to a decrease in unrealized losses, mainly on Sony’s shares of Spotify Technology S.A.
Income before income taxes increased 62.8 billion yen year-on-year to 1 trillion 180.3 billion yen.
During the current fiscal year, Sony recorded 236.7 billion yen of income tax expenses. The effective tax rate of 20.1% in the current fiscal year was lower than the effective tax rate of 20.5% in the previous fiscal year. The effective
tax rate in the current fiscal year reflects the impact of an increase in the tax credits in Japan, and the benefit from a decrease in the deferred tax liabilities related to Japan controlled foreign company taxation. The effective tax rate in
the previous fiscal year reflected the impact of the reversal of a previous write-down of certain deferred tax assets at certain companies in Japan.
Net income attributable to Sony Group Corporation’s stockholders, which deducts net income attributable to
noncontrolling interests, increased 54.9 billion yen year-on-year to 937.1 billion yen.
*The former Electronics Products & Solutions segment was renamed the Entertainment, Technology & Services (ET&S) segment effective from April 2022. This change did not result in any reclassification of businesses across
segments.
Cash Flows
For Consolidated Statements of Cash Flows, charts showing Sony’s cash flow information for all segments, all segments excluding the Financial Services segment and the
Financial Services segment alone, please refer to pages F-8 and F-19.
Operating Activities: During the current fiscal year, there was a net cash inflow of 314.7 billion yen from operating activities, a decrease of 919.0 billion yen year-on-year.
For all segments excluding the Financial Services segment, there was a net cash inflow of 415.5 billion yen, a decrease of 397.8 billion yen year-on-year. This decrease was primarily due to a larger year-on-year increase in inventories and
content assets as well as a smaller increase in trade payables, partially offset by a year-on-year increase in income before income taxes after taking into account non-cash adjustments (including depreciation and amortization, including
amortization of contract costs, other operating (income) expense, net and (gain) loss on securities, net).
The Financial Services segment had a net cash outflow of 56.3 billion yen, compared to a net cash inflow of 459.7 billion yen in the previous fiscal year. This change was mainly due to a smaller year-on-year increase in borrowings in the
life insurance business and the banking business.
Investing Activities: During the current fiscal year, Sony used 1 trillion 52.7 billion yen of net cash in investing activities, an increase of 323.9 billion yen year-on-year.
For all segments excluding the Financial Services segment, there was a net cash outflow of 1 trillion 32.0 billion yen, an increase of 320.9 billion yen year-on-year. This increase was mainly due to a year-on-year increase in payments for
fixed asset purchases, the acquisition of shares of Bungie, Inc., an additional investment in Epic Games, Inc. (“Epic Games”) and a payment related to the acquisition of Industrial Media. Additionally, the previous fiscal year included the
purchase of the equity interest in Ellation Holdings, Inc., which operates the anime business Crunchyroll, the purchase of shares and related assets of certain subsidiaries of Kobalt Music Group Limited including AWAL, Kobalt’s music
distribution business mainly for independent recording artists, and an additional investment in Epic Games.
The Financial Services segment used 23.8 billion yen of net cash in investing activities, essentially flat year-on-year.
Financing Activities: Net cash inflow from financing activities during the current fiscal year was 84.3 billion yen, compared to a net cash outflow of 336.6 billion yen in the previous fiscal year.
For all segments excluding the Financial Services segment, there was a 95.5 billion yen net cash inflow, compared to a net cash outflow of 325.8 billion yen in the previous fiscal year. The cash inflow in the current fiscal year was
primarily due to the procurement of long-term bank loans and the issuance of straight bonds.
In the Financial Services segment, there was a 52.6 billion yen net cash outflow, essentially flat year-on-year.
Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents as of March 31,
2023 was 1 trillion 480.9 billion yen. Cash and cash equivalents of all segments excluding the Financial Services segment was 724.4 billion yen as of March 31, 2023, a decrease of 436.1 billion yen compared with the balance as of March 31,
2022. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 756.5 billion yen as of March 31, 2023, a decrease of 132.6 billion yen compared with the balance as of March 31, 2022.
Outlook for the Fiscal Year Ending March 31, 2024
Sony has established a three-year cumulative Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) as the most important financial performance indicator (Group KPI) in the Fourth Mid-Range Plan for the three fiscal
years starting on April 1, 2021 and ending on March 31, 2024. From the fiscal year ending March 31, 2024, Sony has decided to disclose the actual results and forecast for Adjusted EBITDA on a consolidated basis, which is the Group KPI, and
Adjusted OIBDA (Operating Income Before Depreciation and Amortization) by segment. For the purpose of comparative analysis of the forecasts for these measures for the fiscal year ending March 31, 2024, the results for these measures for the
fiscal year ended March 31, 2023 are also presented in this earnings release.
The forecast for consolidated results for the fiscal year ending March 31, 2024 is as follows:
|
|
(Billions of yen)
|
|
|
|
|
|
|
|
March 31, 2023
Results
|
|
|
March 31, 2024
April Forecast
|
|
|
|
Change from
March 31, 2023 Results
|
|
Sales
|
|
¥
|
11,539.8
|
|
|
¥
|
11,500
|
|
|
¥ |
- 39.8 bil
|
|
|
- 0.3
|
%
|
Operating income
|
|
|
1,208.2
|
|
|
|
1,170
|
|
|
|
- 38.2 bil
|
|
|
- 3.2
|
|
Income before income taxes
|
|
|
1,180.3
|
|
|
|
1,140
|
|
|
|
- 40.3 bil
|
|
|
- 3.4
|
|
Net income attributable to Sony Group Corporation’s stockholders
|
|
|
937.1
|
|
|
|
840
|
|
|
|
- 97.1 bil
|
|
|
- 10.4
|
|
Adjusted OIBDA*1
|
|
|
1,722.7
|
|
|
|
1,770
|
|
|
|
+ 47.3 bil
|
|
|
+ 2.7
|
|
Adjusted EBITDA*1
|
|
|
1,703.4
|
|
|
|
1,750
|
|
|
|
+ 46.6 bil
|
|
|
+ 2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For all segments excluding the Financial Services segment *2
|
|
March 31, 2023
Results
|
|
|
March 31, 2024
April Forecast
|
|
|
|
Change from
March 31, 2023 Results
|
|
Net cash provided by operating activities
|
|
|
415.5
|
|
|
|
1,250
|
|
|
¥ |
+ 834.5 bil
|
|
|
+ 200.8
|
%
|
*1 Adjusted OIBDA and Adjusted EBITDA are not measures in accordance with IFRS. However, Sony believes that these
disclosures may be useful information to investors. Please refer to “Supplemental Information” on pages 11 to 13 for more details, including the formulas and reconciliations for Adjusted OIBDA and Adjusted EBITDA.
*2 Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with IFRS.
However, Sony believes that this disclosure may be useful information to investors. Please refer to page F-16 for details about the preparation of the Condensed Statements of Cash Flows.
Assumed foreign currency exchange rates for the fiscal year ending March 31, 2024 are below.
|
(For your reference)
Average foreign currency exchange rates
for the fiscal year ended March 31, 2023
|
Assumed foreign currency exchange rates
for the fiscal year ending March 31, 2024
|
1 U.S. dollar
|
135.4 yen
|
approximately 130 yen
|
1 Euro
|
140.9 yen
|
approximately 138 yen
|
Sales are expected to be essentially flat year-on-year primarily due to an expected significant decrease in sales in the Financial Services segment and an expected decrease in the ET&S segment, substantially offset by an expected
increase in sales in the G&NS segment and significant increases in sales in the I&SS and Pictures segments.
Operating income is expected to decrease year-on-year primarily due to expected decreases in operating income in the Financial Services and I&SS segments, partially offset by an expected increase in operating income in the G&NS
segment.
Income before income taxes is expected to decrease year-on-year due to the impact of the above-mentioned decrease in operating income.
Net income attributable to Sony Group Corporation’s stockholders is expected to decrease year-on-year, mainly due to the absence of a reduction in income tax expense resulting from a decrease in deferred tax liabilities related to Japan
controlled foreign company taxation in the fiscal year ended March 31, 2023 and an increase in income taxes due to a tax rate change in the United Kingdom from the fiscal year ending March 31, 2024.
Adjusted OIBDA is expected to increase year-on-year primarily due to expected increases in Adjusted OIBDA in the I&SS and G&NS segments, partially offset by an expected decrease in Adjusted OIBDA in the Financial Services segment.
Adjusted EBITDA is expected to increase year-on-year due to the impact of the increase in Adjusted OIBDA.
Because Sony will adopt IFRS 17 “Insurance Contracts” (“IFRS 17”) starting in the first quarter of the fiscal year ending March 31, 2024, the forecast for the fiscal year ending March 31, 2024 is based on IFRS 17. Although IFRS 17 requires
the results for the comparative period, the fiscal year ended March 31, 2023, to be reclassified based on IFRS 17, the results for the fiscal year ended March 31, 2023 contained in this earnings release are based on IFRS 4 “Insurance
Contracts.” Sony will reclassify the results for the comparative period based on IFRS 17 starting with the earnings release for the first quarter of the fiscal year ending March 31, 2024.
Business Segment Information
Sales in each business segment represents sales recorded before intersegment transactions are eliminated. Operating income (loss) in each business segment represents
operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses. For details regarding each segment’s product categories, please refer to page F-14.
Please refer to “Supplemental Information” on pages 11 to 13 for details of the reconciliation of Adjusted OIBDA from operating income in accordance with IFRS for the
fiscal year ended March 31, 2023.
|
|
(Billions of yen)
|
|
|
|
March 31, 2022
Results
|
|
|
March 31, 2023
Results
|
|
|
March 31, 2024
April Forecast
|
|
Game & Network Services (G&NS)
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
2,739.8
|
|
|
|
3,644.6
|
|
|
|
3,900
|
|
Operating income
|
|
|
346.1
|
|
|
|
250.0
|
|
|
|
270
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
337.0
|
|
|
|
365
|
|
Music
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
1,116.9
|
|
|
|
1,380.6
|
|
|
|
1,410
|
|
Operating income
|
|
|
210.9
|
|
|
|
263.1
|
|
|
|
265
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
316.4
|
|
|
|
325
|
|
Pictures
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
1,238.9
|
|
|
|
1,369.4
|
|
|
|
1,520
|
|
Operating income
|
|
|
217.4
|
|
|
|
119.3
|
|
|
|
120
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
168.2
|
|
|
|
165
|
|
Entertainment, Technology & Services (ET&S)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
2,339.2
|
|
|
|
2,476.0
|
|
|
|
2,380
|
|
Operating income
|
|
|
212.9
|
|
|
|
179.5
|
|
|
|
180
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
276.9
|
|
|
|
280
|
|
Imaging & Sensing Solutions (I&SS)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
1,076.4
|
|
|
|
1,402.2
|
|
|
|
1,600
|
|
Operating income
|
|
|
155.6
|
|
|
|
212.2
|
|
|
|
200
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
408.9
|
|
|
|
445
|
|
Financial Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial services revenue
|
|
|
1,533.8
|
|
|
|
1,454.5
|
|
|
|
870
|
|
Operating income
|
|
|
150.1
|
|
|
|
223.9
|
|
|
|
180
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
228.2
|
|
|
|
205
|
|
All Other, Corporate and elimination
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(90.7
|
)
|
|
|
(39.8
|
)
|
|
|
(45
|
)
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
(12.9
|
)
|
|
|
(15
|
)
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
9,921.5
|
|
|
|
11,539.8
|
|
|
|
11,500
|
|
Operating income
|
|
|
1,202.3
|
|
|
|
1,208.2
|
|
|
|
1,170
|
|
Adjusted OIBDA
|
|
|
–
|
|
|
|
1,722.7
|
|
|
|
1,770
|
|
Adjusted EBITDA*
|
|
|
1,597.9
|
|
|
|
1,703.4
|
|
|
|
1,750
|
|
* The differences between Adjusted EBITDA and Adjusted OIBDA on a consolidated basis represent financial income and financial expenses (excluding interest expenses, net, and gains on
revaluation of equity instruments, net). Adjusted EBITDA by segment is not calculated and disclosed because Sony does not include financial income and financial expenses in its performance evaluations by segment, mainly due to the fact that
Sony manages its foreign exchange exposure centrally and globally, except for the Financial Services segment.
Game & Network Services (G&NS)
Results for the fiscal year ended March 31, 2023
Sales increased 904.8 billion yen (33%) year-on-year to 3 trillion 644.6 billion yen (an 18% increase on a constant currency basis). This significant increase in sales was mainly due to the impact of foreign exchange rates, an increase in
sales of hardware and an increase in sales of first-party titles, partially offset primarily by a decrease in sales of non-first-party titles including add-on content.
Operating income decreased 96.1 billion yen year-on-year to 250.0 billion yen. This significant decrease was primarily due to an increase in costs, mainly for game software development and expenses associated with acquisitions completed in
the current fiscal year including Bungie, Inc.*, in addition to the impact of the above-mentioned decrease in sales of non-first-party titles. This decrease in operating income was partially offset by the impact of the above-mentioned increase
in sales of first-party titles as well as a decrease in losses from hardware. During the current fiscal year, there was a 32.4 billion yen negative impact from foreign exchange rate fluctuations.
* 52.7 billion yen was recorded as expenses associated with acquisitions completed in the current fiscal year. For details regarding the acquisition of Bungie, Inc., please refer to pages F-21 and F-22.
Forecast for the fiscal year ending March 31, 2024
Sales are expected to increase year-on-year mainly due to an expected increase in sales of hardware and peripheral devices, partially offset primarily by the impact of foreign exchange rates. Operating income and Adjusted OIBDA are expected
to increase year-on-year mainly due to an expected improvement in hardware profitability and the positive impact of foreign exchange rates reflecting the high ratio of U.S. dollar-denominated costs, in addition to the impact of the
above-mentioned expected increase in sales of peripheral devices. These increases are expected to be partially offset primarily by an expected increase in costs* and the impact of an expected decrease in sales of first-party titles.
* This increase in costs is expected to be partially offset by a decrease in expenses resulting from an expected increase in the capitalized amount of game software development costs from the fiscal year ending March 31, 2024 onward.
Music
The Music segment results include the yen-based results of Sony Music Entertainment (Japan) Inc. and the yen-translated results of Sony Music Entertainment (“SME”) and
Sony Music Publishing LLC (“SMP”), which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.
Results for the fiscal year ended March 31, 2023
Sales increased 263.7 billion yen (24%) to 1 trillion 380.6 billion yen (an 8% increase on a constant currency basis). This significant increase in sales was primarily due to the impact of foreign exchange rates as well as increases in
sales for Recorded Music and Music Publishing, partially offset by lower sales for Visual Media and Platform due to a decrease in sales in the anime business. The increases in sales for Recorded Music and Music Publishing were primarily due to
higher revenues from paid subscription streaming services, which also benefited from the success of a number of new releases in Recorded Music. Operating income significantly increased 52.2 billion yen year-on-year to 263.1 billion yen,
primarily due to the positive impact of foreign exchange rates and the impact of the above-mentioned increase in sales for Recorded Music and Music Publishing, as well as the impact of litigation settlements, net of expenses, of 5.7 billion yen
received in relation to lawsuits for Recorded Music and Music Publishing, partially offset by the impact of the above-mentioned decrease in sales for Visual Media and Platform..
Forecast for the fiscal year ending March 31, 2024
Sales are expected to increase year-on-year mainly due to higher sales for Recorded Music and Music Publishing primarily resulting from an expected increase in revenues from streaming services, partially offset by the impact of foreign exchange rates. Operating income is expected to be essentially flat year-on-year due to the impact of the above-mentioned increase in sales, substantially offset by an
increase in selling, general and administrative expenses as well as the negative impact of foreign exchange rates and the absence of litigation settlements, net of expenses, of 5.7 billion yen received in relation to lawsuits for Recorded Music
and Music Publishing, which were recorded in the fiscal year ended March 31, 2023. Adjusted OIBDA is expected to increase year-on-year primarily due to the same factors affecting operating income, excluding the impact of the above-mentioned
litigation settlements.
Pictures
The Pictures segment results are the yen-translated results of Sony Pictures Entertainment Inc. (“SPE”), which aggregates the results of its worldwide subsidiaries on a
U.S. dollar basis. Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”
Results for the fiscal year ended March 31, 2023
Sales increased 130.5 billion yen, an 11% increase year-on-year (an 8% decrease on a U.S. dollar basis), to 1 trillion 369.4 billion yen. This decrease on a U.S. dollar basis was primarily due to lower theatrical revenues in Motion Pictures
compared to the prior fiscal year which benefited from the strong performance of several franchise films including Spider-Man: No Way Home and Venom: Let There Be Carnage, lower licensing revenues in Television Productions as the prior fiscal year benefitted from the licensing of Seinfeld, and lower licensing revenues in Motion Pictures as the prior fiscal year benefitted from a greater number of new films licensed to digital streaming
services. These decreases in sales were partially offset primarily by an increase in series deliveries and the impact of acquisitions of Industrial Media and Bad Wolf in Television Productions, as well as higher revenues from anime streaming
services including the impact of the acquisition of Crunchyroll.
Operating income decreased 98.1 billion yen, a 45% decrease year-on-year (a 54% decrease on a U.S. dollar basis), to 119.3 billion yen. This significant decrease in operating income on a U.S. dollar basis was primarily due to the absence of
the 70.0 billion yen gain recognized from the transfer of GSN Games, a division of Game Show Network, LLC, in the prior fiscal year and the impact of the above-mentioned decrease in sales.
Forecast for the fiscal year ending March 31, 2024
Sales are expected to significantly increase year-on-year, primarily due to an increase in theatrical releases including several franchise films in Motion Pictures, and higher sales in Media Networks primarily from Crunchyroll, the anime
streaming service, as well as the India business. Operating income and Adjusted OIBDA are expected to be essentially flat year-on-year due to the above-mentioned increase in sales, substantially offset by higher marketing costs resulting from
an increase in theatrical releases including several franchise films, and a lower contribution from prior fiscal year releases compared to the fiscal year ended March 31, 2023, which included higher home entertainment and television licensing
revenues from several franchise films released theatrically in the fiscal year ended March 31, 2022.
Entertainment, Technology & Services (ET&S)
Results for the fiscal year ended March 31, 2023
Sales increased 136.8 billion yen (6%) year-on-year to 2 trillion 476.0 billion yen (a 4% decrease on a constant currency basis). This increase in sales was primarily due to the impact of foreign exchange rates as well as an increase in
sales of digital cameras resulting from higher unit sales, partially offset by a decrease in sales of televisions resulting from lower unit sales.
Operating income decreased 33.5 billion yen year-on-year to 179.5 billion yen. This decrease in operating income was mainly due to the impact of the above-mentioned decrease in sales of televisions, partially offset by the impact of the
above-mentioned increase in sales of digital cameras. During the current fiscal year, there was a 9.4 billion yen positive impact from foreign exchange rate fluctuations.
Forecast for the fiscal year ending March 31, 2024
Sales are expected to decrease year-on-year due to a decrease in sales of televisions resulting from lower unit sales as well as the impact of foreign exchange rates. Operating income and Adjusted OIBDA are expected to be essentially flat
year-on-year due to an increase in operating income of televisions resulting from a reduction in logistics and other operating expenses, partially offset by an increase in research and development expenses and other investment for growth areas.
Imaging & Sensing Solutions (I&SS)
Results for the fiscal year ended March 31, 2023
Sales increased 325.8 billion yen (30%) year-on-year to 1 trillion 402.2 billion yen (an 11% increase on a constant currency basis). This significant increase in sales was mainly due to the impact of foreign exchange rates and an increase
in sales of image sensors for mobile products resulting from an improvement in the product mix, partially offset by a decrease in unit sales.
Operating income increased 56.6 billion yen year-on-year to 212.2 billion yen. This significant increase was mainly due to the positive impact of foreign exchange rates and the impact of the above-mentioned increase in sales, partially
offset by an increase in research and development expenses as well as depreciation and amortization expenses, and an increase in manufacturing costs. During the current fiscal year, there was a 120.9 billion yen positive impact from foreign
exchange rate fluctuations.
Forecast for the fiscal year ending March 31, 2024
Sales are expected to increase primarily due to an expected increase in sales of image sensors for mobile products resulting from an improvement in the product mix as well as an increase in unit sales. Operating income is expected to
decrease year-on-year primarily due to an increase in depreciation and amortization expenses as well as research and development expenses, an increase in manufacturing costs, and the negative impact of foreign exchange rates, partially offset
by the impact of the above-mentioned increase in sales. Adjusted OIBDA is expected to increase due to the impact of the above-mentioned increase in sales, partially offset by an increase in research and development expenses, an increase in
manufacturing costs, and the negative impact of foreign exchange rates.
Financial Services
The Financial Services segment results include Sony Financial Group Inc. (“SFGI”) and SFGI’s consolidated subsidiaries such as Sony Life, Sony Assurance Inc., and Sony
Bank Inc. The results discussed in the Financial Services segment differ from the results that SFGI and SFGI’s consolidated subsidiaries disclose separately on a Japanese statutory basis.
Results for the fiscal year ended March 31, 2023
Financial services revenue decreased 79.3 billion yen year-on-year to 1 trillion 454.5 billion yen, mainly due to a decrease in revenue at Sony Life. Revenue at Sony Life decreased 108.4 billion yen year-on-year to 1 trillion 242.1 billion
yen, due to a decrease in net gains on investments in the separate accounts.
Operating income increased 73.8 billion yen year-on-year to 223.9 billion yen. This significant increase in operating income was mainly due to the recovery of 22.1 billion yen of an unauthorized withdrawal of funds at a subsidiary of Sony
Life in the fiscal year ended March 31, 2023 which was recorded as a 16.8 billion yen loss in the fiscal year ended March 31, 2022, as well as a significant increase in operating income at Sony Life. Operating income at Sony Life increased
29.7 billion yen year-on-year to 177.0 billion yen. This increase in operating income was mainly due to a gain recorded on the sale of real estate as well as an increase in profits due to accumulation of policy amount in force, partially
offset by an increase primarily in insurance payments related to COVID-19.
Forecast for the fiscal year ending March 31, 2024
Financial services revenue is expected to significantly decrease year-on-year. This decrease is mainly due to the impact of deducting the amount equivalent to the surrender benefit from the revenue*, which was previously included in
insurance premium revenue at Sony Life, due to the adoption of IFRS 17 “Insurance Contracts” from the fiscal year ending March 31, 2024. Operating income is expected to decrease year-on-year primarily due to a gain recorded on the sale of real
estate at Sony Life, the recovery of an unauthorized withdrawal of funds at a subsidiary of Sony Life, and a decrease in the provision of policy reserves due to fluctuations in the stock market and interest rates at Sony Life in the fiscal
year ended March 31, 2023, partially offset by an increase primarily in insurance payments related to COVID-19 at Sony Life in the fiscal year ended March 31, 2023. Adjusted OIBDA is expected to decrease due to the same factors affecting
operating income, excluding the impact of the recovery of the unauthorized withdrawal of funds at a subsidiary of Sony Life.
The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future.
Accordingly, future market fluctuations could further impact the above forecast.
* Expenses are also expected to decrease due to the deduction of the amount equivalent to the surrender benefit, which was previously included in insurance payments.
The above forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances. Actual results may differ materially from those included in this forecast due to a variety of factors. See
“Cautionary Statement” below.
Note
Sales on a Constant Currency Basis and Impact of Foreign Exchange Rate Fluctuations
The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the same period of the previous fiscal year to local currency-denominated monthly sales in the relevant
period of the current fiscal year. For SME and SMP in the Music segment, and in the Pictures segment, the constant currency amounts are calculated by applying the monthly average U.S. dollar / yen exchange rates after aggregation on a U.S.
dollar basis.
Results for the Pictures segment are described on a U.S. dollar basis as the Pictures segment reflects the operations of SPE, a U.S.-based operation that aggregates the results of its worldwide subsidiaries in U.S. dollars.
The impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange rate for the same period of the previous fiscal year from the relevant period of the current
fiscal year to the major transactional currencies in which the sales are denominated. The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting from the impact on sales the impact on cost of sales
and selling, general and administrative expenses calculated by applying the same major transactional currencies calculation process to cost of sales and selling, general and administrative expenses as for the impact on sales. The I&SS
segment enters into its own foreign exchange hedging transactions, and the impact of those transactions is included in the impact of foreign exchange rate fluctuations on sales and operating income (loss) for that segment.
This information is not a substitute for Sony’s consolidated financial statements measured in accordance with IFRS. However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the
operating performance of Sony.
Progress on the Fourth Mid-Range Plan
In the Fourth Mid-Range Plan for the three fiscal years starting on April 1, 2021 and ending on March 31, 2024, Sony has established a financial target of cumulative total Adjusted EBITDA of 4.3 trillion yen on a consolidated basis. Based
on the progress toward the plan’s objectives, Sony expects three-year cumulative total Adjusted EBITDA to increase to 5.0 trillion yen, 16% higher than the target of 4.3 trillion yen.
Basic Views on Selection of Accounting Standards
Sony has voluntarily adopted IFRS from the first quarter of the fiscal year ended March 31, 2022, with the goal of further streamlining and maintaining the quality of Sony’s financial and management reporting systems over the mid- to
long-term, and improving the international comparability of financial information in the capital markets.
Supplemental Information
Regarding Adjusted OIBDA and Adjusted EBITDA
Sony believes that Adjusted OIBDA and Adjusted EBITDA are performance metrics suitable for the long-term management that Sony prioritizes. This is because (i) they represent the sustainable earnings power of the business as they do not
include the effects of one-time gains and losses, (ii) they enable management to confirm that all the businesses of the Sony Group, including the Financial Services business, are expanding over the mid- to long-term through cycles of investment
and return, and (iii) they are often used to calculate corporate value. Adjusted OIBDA and Adjusted EBITDA are not measures in accordance with IFRS. However, Sony believes that these disclosures may be useful information to investors.
Adjusted OIBDA and Adjusted EBITDA should be considered in addition to, not as a substitute for, Sony’s results in accordance with IFRS.
Adjusted OIBDA (Operating Income Before Depreciation and Amortization) is calculated by the following formula:
Adjusted OIBDA = Operating income + Depreciation and amortization expense excluding amortization for film costs, broadcasting rights and internally developed game content and master recordings included in Content
assets, as well as for deferred insurance acquisition costs - the profit and loss amount that Sony deems non-recurring
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is calculated by the following formula:
Adjusted EBITDA = Net income attributable to Sony Group Corporation’s stockholders + Net income attributable to noncontrolling interests + Income taxes + Interest expenses, net, recorded in Financial income and
Financial expense - Gain on revaluation of equity instruments, net, recorded in Financial income and Financial expense + Depreciation and amortization expense excluding amortization for film costs, broadcasting rights and internally developed
game content and master recordings included in Content assets, as well as for deferred insurance acquisition costs - the profit and loss amount that Sony deems non-recurring
The following table shows a reconciliation of Adjusted OIBDA from operating income in accordance with IFRS for the fiscal year ended March 31, 2023.
|
|
Fiscal year ended March 31
|
|
|
|
2023
|
|
|
|
(Yen in billions)
|
|
Game & Network Services (G&NS)
|
|
|
|
Operating income
|
|
|
250.0
|
|
Depreciation and amortization expense*
|
|
|
87.0
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
–
|
|
Adjusted OIBDA
|
|
|
337.0
|
|
Music
|
|
|
|
|
Operating income
|
|
|
263.1
|
|
Depreciation and amortization expense*
|
|
|
59.0
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
(5.7
|
)
|
Adjusted OIBDA
|
|
|
316.4
|
|
Pictures
|
|
|
|
|
Operating income
|
|
|
119.3
|
|
Depreciation and amortization expense*
|
|
|
48.9
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
–
|
|
Adjusted OIBDA
|
|
|
168.2
|
|
Entertainment, Technology & Services (ET&S)
|
|
|
|
|
Operating income
|
|
|
179.5
|
|
Depreciation and amortization expense*
|
|
|
97.4
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
–
|
|
Adjusted OIBDA
|
|
|
276.9
|
|
Imaging & Sensing Solutions (I&SS)
|
|
|
|
|
Operating income
|
|
|
212.2
|
|
Depreciation and amortization expense*
|
|
|
196.7
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
–
|
|
Adjusted OIBDA
|
|
|
408.9
|
|
Financial Services
|
|
|
|
|
Operating income
|
|
|
223.9
|
|
Depreciation and amortization expense*
|
|
|
26.3
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
(22.1
|
)
|
Adjusted OIBDA
|
|
|
228.2
|
|
All Other, Corporate and elimination
|
|
|
|
|
Operating income
|
|
|
(39.8
|
)
|
Depreciation and amortization expense*
|
|
|
26.8
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
–
|
|
Adjusted OIBDA
|
|
|
(12.9
|
)
|
Consolidated
|
|
|
|
|
Operating income
|
|
|
1,208.2
|
|
Depreciation and amortization expense*
|
|
|
542.2
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
(27.8
|
)
|
Adjusted OIBDA
|
|
|
1,722.7
|
|
The following table shows a reconciliation of Adjusted EBITDA from net income attributable to Sony Group Corporation’s stockholders in accordance with IFRS for the fiscal year ended March 31, 2023.
|
|
Fiscal year ended March 31
|
|
|
|
2023
|
|
|
|
(Yen in billions)
|
|
Net income attributable to Sony Group Corporation’s stockholders
|
|
|
937.1
|
|
Net income attributable to noncontrolling interests
|
|
|
6.5
|
|
Income taxes
|
|
|
236.7
|
|
Interest expenses, net, recorded in Financial income and Financial expense
|
|
|
4.0
|
|
Gain on revaluation of equity instruments, net, recorded in Financial income and Financial expense
|
|
|
4.6
|
|
Depreciation and amortization expense*
|
|
|
542.2
|
|
Profit and loss amount that Sony deems non-recurring**
|
|
|
(27.8
|
)
|
Adjusted EBITDA
|
|
|
1,703.4
|
|
* Depreciation and amortization expense excludes amortization of film costs, broadcasting rights and internally developed game content and master recordings included in Content assets, as well as for
deferred insurance acquisition costs.
** The following table shows the details of the profit and loss amount that Sony deems non-recurring in calculating Adjusted OIBDA and Adjusted EBITDA for the fiscal year ended March 2023.
|
|
Fiscal year ended March 31
|
|
|
|
2023
|
|
|
|
(Yen in billions)
|
|
Impact of litigation settlements, net of expenses, received in relation to lawsuits for Recorded Music and Music Publishing (Music segment)
|
|
|
5.7
|
|
Recovery of an unauthorized withdrawal of funds at a subsidiary of Sony Life which occurred in the previous fiscal year (Financial Services segment)
|
|
|
22.1
|
|
Total
|
|
|
27.8
|
|
Cautionary Statement
Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking
statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or
“should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials
released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause
actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:
(i)
|
Sony’s ability to maintain product quality and customer satisfaction with its products and services;
|
(ii)
|
Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game
and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and
subjective and changing customer preferences;
|
(iii)
|
Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of
new technologies and distribution platforms;
|
(iv)
|
the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures,
restructurings and other strategic initiatives;
|
(v)
|
changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those
related to taxation, as well as growing consumer focus on corporate social responsibility;
|
(vi)
|
Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to
prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;
|
(vii)
|
Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing,
marketing and distribution of its products, and its other business operations;
|
(viii)
|
the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
|
(ix)
|
Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;
|
(x)
|
Sony’s ability to forecast demands, manage timely procurement and control inventories;
|
(xi)
|
foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in
which Sony’s assets, liabilities and operating results are denominated;
|
(xii)
|
Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;
|
(xiii)
|
Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself
against claims that its products or services infringe the intellectual property rights owned by others;
|
(xiv)
|
the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and
operating income of the Financial Services segment;
|
(xv)
|
shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment;
|
(xvi)
|
risks related to catastrophic disasters, geopolitical conflicts, pandemic disease or similar events;
|
(xvii)
|
the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business
information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and
|
(xviii)
|
the outcome of pending and/or future legal and/or regulatory proceedings.
|
Risks and uncertainties also include the impact of any future events with material adverse impact. The continued impact of COVID-19 and developments relating to the situation in Ukraine and Russia could heighten many of the risks and
uncertainties noted above. Important information regarding risks and uncertainties is also set forth in Sony’s most recent Form 20-F, which is on file with the U.S. Securities and Exchange Commission.