|Date||Wednesday, May 10, 2023 4:00 pm - 5:40 pm|
Junichi Miyakawa (President & CEO)
Jun Shimba (Representative Director & COO)
Yasuyuki Imai (Representative Director & COO)
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
At the earnings results briefing, Mr. Junichi Miyakawa, President & CEO of SoftBank Corp. (“the Company”), discussed the consolidated results for FY2022 and provided a review of medium-term management targets announced in August 2020. In addition, Mr. Miyakawa discussed the long-term vision and medium-term management plan (FY2023 to FY2025).
1. Consolidated Results
- Revenue for FY2022 was ¥5,912.0 billion, up 4% year on year.
- Operating income was ¥1,060.2 billion, up 10% year on year. The result exceeded the operating income forecast that was upwardly revised in November 2022. A re-measurement gain of ¥294.8 billion associated with making PayPay Corporation a consolidated subsidiary*1 was recognized.
- Net income attributable to owners of SoftBank Corp. was ¥531.4 billion, up 3% year on year.
- Adjusted free cash flow*2 was ¥618.6 billion. The Company generated a high level of adjusted free cash flow, as initially forecast at the beginning of the fiscal year.
2. Review of Medium-term Management Targets
(announced in August 2020)
- We met business target and shareholder return commitments announced in August 2020 as we responded to drastic changes in business environment, including mobile service price reduction.
- Dividend per share of ¥86*3 was maintained from FY2020 to FY2022. We delivered stable shareholder returns without reducing the dividend.
- We established share buyback program (up to ¥100 billion, 56,300,000 shares) for the purpose of retirement to achieve total shareholder return ratio*4 (weighted average over 3 years) of around 85% during the same period.
Business Targets (FY2022)
|Revenue||¥5,500.0 billion||¥5,912.0 billion||Significantly surpassed target|
|Operating income||¥1,000 billion||¥1,060.2 billion||Achieved targets
(by recognizing a gain on the re-measurement of PayPay despite adverse business environment due to mobile service price reductions)
|Net income attributable to owners of SoftBank Corp.||¥530.0 billion||¥531.4 billion|
Shareholder Return Targets (FY2020 to FY2022)
|Dividend per share||No reductions||Maintained at ¥86*3 without reductions||Achieved|
|Total shareholder return ratio*4||Around 85%||85%||Achieved|
3. Long-term Vision
- We aim to be “a company that provides Next-generation Social Infrastructure essential for development of digital society” over the long term.
- With this vision, our intention is to build infrastructure designed to meet the projected rapid increase in demand for data processing and electricity brought on by the accelerated evolution of AI, and to become an indispensable company that will support the future's vast array of digital services.
4. Medium-term Management Plan (FY2023 to FY2025)
- To realize the aforementioned long-term vision, we have adopted “Rebuild business foundations” as a theme of the medium-term management plan, and we will work to achieve a V-shaped recovery from the impact of the mobile service price reduction implemented in spring 2021.
① Promote the “Beyond Carrier” Growth Strategy
- We will promote the “Beyond Carrier” strategy, which aims at sustainable growth in the telecommunications business, while at the same time going beyond just being a telecommunications carrier to actively roll out new businesses in fields such as DX (Digital Transformation)/Solution, Financial, Yahoo! JAPAN/LINE, and new business fields.
Operating Income Forecasts for FY2023
and Medium-term Management Plan Targets by Segment:
|Operating income forecast for FY2023||Medium-term Management Plan Target (FY2023 to FY2025)|
|Consumer segment||¥470.0 billion||Mobile service revenue: To hit bottom in FY2023 and return to growth|
|Segment income: To hit bottom in FY2022 and return to growth|
|Enterprise segment||¥152.5 billion||Business solution and others revenue: Double-digit compound annual growth rate (“CAGR”)|
|Segment income: Double-digit CAGR|
|Distribution segment||¥26.7 billion||Segment income: ¥30.0 billion (FY2025)|
|Financial segment||¥-20.0 billion||Segment income: Turn profitable by FY2025|
|Yahoo! JAPAN/LINE segment||¥176.0 billion||Improvement of business efficiency and renewed growth of Media, Search, and Commerce Business from FY2024 and beyond|
Growth Strategy by Segment
1. Consumer segment
- Number of cumulative smartphone subscribers is growing steadily toward the FY2023 target of 30 million subscribers. We will continue to maintain net additions at level of 1 million subscribers per year.
- To improve ARPU (Average Revenue Per User), we will work to enhance value-added services and develop new services that combine the 5G standalone network and Group services.
2. Enterprise segment
- We will provide solutions tailored to company scale as well as generating new businesses leading to solutions of social issues, with the aim of driving further growth.
- Notably, from FY2023, we will implement measures in earnest to develop the small and medium-sized enterprise (SME) market which accounts for a majority of companies in Japan. We will collaborate with dealers, major company clients, industry associations and Group companies.
- We will promote the creation of the data integration platform “xIPF*5” as part of our efforts to develop new businesses. We will strive to achieve Japan's digitalization.
3. Financial segment
- PayPay Corporation: PayPay Corporation will further expand payment services, value-added services for merchants, and financial services. It will diversify its revenue sources to achieve high growth.
- SB Payment Service Corp.: SB Payment Service Corp. will expand transactions in the non-telecommunication areas (other than telecommunication payment settlements of the Company), with the aim of increasing gross merchandise value (GMV) to over ¥10 trillion in FY2025 (representing a CAGR of over 15% from FY2022).
4. Yahoo! JAPAN/LINE segment
- Z Holdings Corporation, LINE Corporation, Yahoo Japan Corporation and two other companies are scheduled to merge on October 1, 2023.
- Fixed cost reductions*6 of around ¥30.0 billion are planned for FY2023. Improve business efficiency.
- Aiming for renewed growth in FY2024 and beyond, Z Holdings Corporation aims to increase revenue by re-strengthening the media and search areas through ID linkage*7 and renewal of the premium membership system etc.
Initiatives for Renewable Energy
- We have established targets for the substantial renewable energy ratio relative to our own electricity use*8. We are targeting a ratio of 50% by FY2025 and a ratio of 100% by FY2030 (of which, more than half is to be procured from power generated from renewable energy sources).
- As part of these efforts, we have entered into renewable energy procurement agreements with renewable power producers. We plan to procure renewable energy in an amount equal to the amount of electricity used by our telecommunications business (approximately 2 billion kWh).
- Through the new procurement*9 of renewable energy, we will strive to contribute to the realization of a decarbonized society and to shift to a business structure that is less vulnerable to impact of hikes in electricity prices.
② Financial Targets
- We have adopted net income attributable to owners of SoftBank Corp. as our most important indicator. We will pursue record-high profit (¥535.0 billion) in FY2025.
- We will pursue operating income for FY2025 to return to the level before mobile service price reduction (FY2021: ¥970.0 billion).
- Dividend per share for FY2023 is forecast at ¥86, maintaining a high level of shareholder returns.
- *1PayPay Corporation was converted into a subsidiary through an intermediary holding company (B Holdings Corporation), which was jointly established by SoftBank Corp. and Z Holdings Corporation.
- *2Adjusted free cash flow = free cash flow + (proceeds from securitization of installment sales receivables - repayments thereof). Excludes free cash flow of A Holdings Corporation, Z Holdings Group, B Holdings Corporation, PayPay Corporation, and PayPay Card Corporation, and loans to Board Directors, etc. and includes dividend from A Holdings Corporation. Before deduction of repayment of lease liabilities (rent expenses on telecommunication facilities and real estate, etc.), which is recorded as cash flows from financing activities. The actual amount for FY2022 is ¥122.4 billion.
- *3The year-end dividend for FY2022 is scheduled to be resolved at the Board of Directors meeting on May 24, 2023.
- *4Total amount of dividends paid and treasury stock retired during the three years from FY2020 to FY2022 divided by the total amount of net income attributable to owners of SoftBank Corp. during the same three years.
- *5cross Integrated PlatForm. This platform allows siloed private sector data, national data, and sensor data to be integrated on a shared platform, thereby realizing digitalization in a wide range of fields.
- *6Amount of fixed cost to be reduced excluding PayPay Corporation and Z Holdings Corporation's listed subsidiaries; ZOZO, Inc., ASKUL Corporation, ValueCommerce Co., Ltd. (excludes depreciation).
- *7The linkage of LINE ID and Yahoo! JAPAN ID is scheduled to begin in October 2023. In addition, integration with PayPay ID is scheduled to begin during FY2024.
- *8The total for SoftBank Corp. and Wireless City Planning Inc.
- *9Mainly renewable energy with additionality (the effect of adding new renewable energy generation capacity)